The Federal Government said it will not reverse the new approach of selling petroleum according to prevailing global market as it does not bhave the financial capacity to subsidize the cost of premium motor spirit (PMS) otherwise known as petrol.
Minister of State for Petroleum Resources, Chief Timipre Sylva, disclosed this on while addressing journalist in Abuja.
The minister revealed that the government has saved about N1 trillion since the introduction of the deregulation policy in April.
Chief Sylva also revealed the government has concluded plans to merge the Petroleum Products Pricing Regulatory Agency (PPPRA), and the Petroleum Equalisation Fund (PEF), into one agency called ‘The Authority’.
It will be recalled that the Petroleum Products Marketing Company (PPMC) a subsidiary of the Nigerian National Petroleum Corporation (NNPC) had on Wednesday September 2 announced a new Ex-depot price of N151.56 for petrol.
Ex-depot price is the price marketers buy products from depot owners.
An increase or reduction in ex-depot price determines the pump price of petrol.
Consequent upon the recent announcement of increment in the Ex-depot price various petroleum products marketing association have directed their members to increase their pump prices to as much as N162 per litre, while Labour unions, student bodies and civil society organizations called on the government to reverse the increase in price of fuel.
However industry experts appears to have bought the government views as the approves of the decision to sell at globally acceptable price. Prof. Wumi Iledare, former president, Nigerian Association for Energy Economics (NAEE) while speaking on the development said the new pump price of petrol in the country is in line with development in the global oil market.
Iledare disclosed this in an interview with our reporter in Abuja on Thursday.
According to him going by the prevailing market fundamentals, the cost of petrol could be as high as N200 per litre in the country.
“The reality on the ground is not pretty at all with respect to what the price ought to be.
“At the current official exchange rate of one dollar to 385, 200 is about right price because of the level of demand driven by population and quality of life.
“Keep in mind that any attempt to invoke subsidising petroleum has unintended consequences,” he said. Iledare, a professor of Petroleum Economics said that it was unfortunate that the country missed the opportunities when there was lower crude oil price.
“We suggested not to set the price then, but fear of unrest predominate government action then. “The economy is highly dependent on oil revenue. Salaries are low and not paid. “It is a double whammy for petrol to go up. But no budget to subsidize,” he said.
He advised that Nigerians must adjust and government on its part should pump more money to the economy and invoke patriotism
“Nigeria’s exchange rates call for at least N200 per litre in Nigeria.”
“In Ghana, a litre is about N325 -N350 per litre of petrol. Like Nigeria PMS consumed are imported, lessons can be learnt from Ghana.
“If Ghana is surviving, we need to learn from them,” he added. Leadership