FG ends kerosene subsidy, pegs price at N83 per litre
The Federal Government, weekend, hiked the
price of Household Kerosene (HHK) to N83 per litre from N50 per litre, thereby,
officially ending subsidy on the product.
The Petroleum Products Pricing Regulatory
Agency, PPPRA , in its product pricing template released, weekend, however,
stated that the N83 per litre price applies only to the Nigerian National
Petroleum Corporation (NNPC), meaning that other petrol stations and dealers
can sell higher than the stipulated amount.
Curiously, the hike in the price of kerosene
came at a time when the price of crude oil had dropped to record low, with the
price of petroleum products, such as kerosene, fuel and diesel, among others,
dropping significantly in a number of countries, like the United States.
This also brings to question, the recent
reduction in the price of Premium Motor Spirit announced by the Federal
Government and which commenced at the beginning of the year.
Again, the PPPRA’s template also showed that
at N83 per litre, the Federal Government is making a gain of N10.72 for every
litre, as it puts the Expected Open Market Price, which is the Landing Cost
plus Total Margins at N72.28 per litre. The expected open market price is the
prevailing open market rate for the product in Nigeria, after taking certain
costs into consideration.
Giving a breakdown of the price, the PPPRA
template put the Landing Cost of the
product at N57.98 per litre, while the total margin due for middlemen was put
at N14.30.
Further breakdown of the Total Margins showed
that retailers margin was put at N5 per litre; Transporters, N3.05 per litre;
Dealers, N1.95 per litre; Bridging fund, N5.85 per litre; Marine Transport
Average, N0.15 and Admin Charges, N0.15.
The PPPRA further put official ex-depot
price, which is the price depot owners would sell at marketers, at N68.70 per
litre, official ex-depot price for collection, N73 per litre while ex-coastal
price is N68.02 per litre.
Late December, the PPPRA had on behalf of the
Federal Government announced that effective January 1, 2016, Premium Motor
Spirit, otherwise known as petrol, would be sold at N86 per litre by the
Nigerian National Petroleum Corporation (NNPC) retail stations, while other oil
marketers would sell at N86.50 per litre.
Executive Secretary of the PPPRA, Mr. Farouk
Ahmed, who made the announcement, said the reduction in the price of the
commodity was due to an implementation of the revised components of the
Petroleum Products Pricing Template for PMS and household kerosene.
According to him, the revised template, which
would be reviewed on quarterly basis, is geared towards ensuring an efficient
and market-driven price that would reflect current realities.
He said: “Since 2007, while crude oil price
had been moving up and down, the template remained the same. This had made it
necessary for us to introduce a mechanism whereby the template would be
sensitive to the price of crude oil.
“However, the template is not static, as
there would be a quarterly review and if there is any major shift, the Minister
of State for Petroleum Resources would be expected to call for a review, either
upward or downward, depending on the market condition.“
