Despite NNPC’s denial, a new fuel price regime appears imminent

The Nigerian National Petroleum Corporation (NNPC) may have dismissed reports suggesting that a new Petrol (Premium Motor Spirit) pump price is on the way, but recent developments indicate that a new price regime appears imminent.

The NNPC Group General Manager, Group Public Affairs Division, Mr Ndu Ughamadu, has clarified a statement credited to the NNPC GMD, Mallam Kyari on petrol pump price. According to Ughamadu, Mallam Kyari had simply observed the huge pump price disparity between Nigeria and other neighbouring countries.

What does Kyari really mean? The new NNPC GMD was quoted by sections of the media to have hinted at the possible review of the petrol pump price. While speaking on Wednesday during a courtesy visit to the Senate president Ahmed Lawan, at the National Assembly Complex in Abuja, Kyari stated that it is very difficult to make petrol available at N145 and the cheap price of petrol encourages smuggling.

“The N145 per litre fuel price regime in Nigeria runs against the N350 per litre most of the other West African countries operate, encouraging smuggling. It is even very difficult for us to make the product available at N145.”

NNPC new GMD, Mele Kyari
  • Kayari’s statement implies that the Federal Government is paying through its nose to fund subsidy’s payment.
  • The current Petrol price regime puts Nigeria behind most West African Countries in terms of fiscal responsibility.
  • Fuel scarcity is likely to emerge as the government may default in paying fuel importers subsidy
  • Following Kyari’s statement, Nigerians may need to brace up for another looming fuel scarcity which will be borne out of panic buying and hoarding

Connecting recent developments: Although NNPC has dismissed the plan to increase pump price, it could only a matter of time before such an announcement is made by the government. There has been constant pressure and growing calls on President Muhammadu Buhari’s administration to remove fuel subsidy due to the billions of naira spent on payment to fuel importers.

  • Recall that the recent fuel scarcity that rocked some parts of the country in April was as a result of a statement credited to the former minister for Finance, Zainab Ahmed, that the government was ready to phase-out fuel subsidy payment in the country.
  • Following the statement, panic buying and hoarding created artificial scarcity across most states in the country.
  • Just recently, the Former Central Bank of Nigeria (CBN) Governor and current Emir of Kano, Sanusi Lamido, warned that Nigeria is on the threshold of bankruptcy following unfavourable economic policies such as subsidising petroleum products and electricity tariffs.

 

A new Petrol Pump price looms: It is crystal clear that the government cannot sustain the payment of subsidy for long in the face to depleting government revenue from the oil. Hence, while reports of Petrol price increase have been quashed in recent months, sources have revealed a new price regime will emerge soon.

While speaking today during a courtesy call on the new NNPC-GMD, Chairman of Nigeria Governors’ Forum (NGF), Dr Kayode Fayemi, also revealed subsidy payment is biting hard

In the meantime, while fuel subsidy removal is imminentthe federal government needs to tread cautiously in its purported plan to remove the long due fuel subsidy, so as not to release untold hardship to the teaming Nigerians and business owners.

 

Source: Nairametrics

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