President Muhammadu Buhari is expected to save N122.478 billion through the introduction of new pricing template for Premium Motor Spirit (PMS)and Dual Purpose Kerosene (DPK) of Petroleum Products Pricing Regulatory Authority (PPPRA) initiated by the Minister of State for Petroleum Dr Ibe Kachikwu to take effect from January 1,2016.
The expected savings from the template represents higher figures over budgets of Katsina N111.4 billion, Anambra N101.4bn and 15 other states of the federation where PMS and Kerosene were sold above the regulated prices of N87 and N50 per litre respectively in 2015.
The budgets of similar states fell short of loss accrued to the federal government through the federation account on the account of new pricing template of PPPRA going by the analysis of the 2016 budget estimates of Adamawa -N120bn, Kwara – N116,134,043bn, Edo- N111.5 bn, Kebbi- N107 bn, Imo- N102.2 bn, Bauchi- N102bn, Ebonyi -N101.1 bn, Enugu-N85.1bn,Taraba State -N68.8bn, Gombe State- N76.5billion, Kogi- N74,241, 996, 381bn,Niger-N74.6 bn, Nasarawa -N77.9bn and Yobe -N88.9 bn.
The analysis of the new PPPRA pricing template also revealed that for the first quarter of 2016, the initiative of Dr Kachikwu will assist President Buhari to boost the Federation Account with N30.452bn instead of paying cheap money to the marketers and importers of PMS and kerosene. The breakdown shows that for the first quarter of this year ending March 31, savings from the new PPPRA will stand at N23.004bn for PMS and N7. 337bn for kerosene regardless of the volatility in the international crude oil price. It is interesting to know that the adjusted margins by the Minister of State for Petroleum is not affected by the prices of crude oil.
However, some marketers explained that the new pricing template would discourage marketers from financing fuel importation due to high interest rate on fund being raised from banks to finance the product being imported and volatility of the crude oil price.
One of them, who is the Vice Chairman of Techno Oil Limited, Mrs Nkechi Obi noted that even though marketers are in support of the administration of President Buhari on initiatives for the oil and gas industry, they were not happy because they were not consulted before the new pricing template was introduced. “No marketers will deliberately embark on fuel importation to surcharge the government through the old pricing template introduced nearly 10 years ago through adequate consultation with stakeholders across sectors of the economy,” she disclosed..
Mrs Obi also lamented that as at the time the old template was introduced, Naira was stronger than what it is currently. According to her, “the new pricing template failed to consider the current exchange rate of Naira to Dollar since payment for most of the services including vessels for lightening are being transacted in dollars which currently stands at N197 compared to N155 at this same period last year”,
She added: “We will appreciate a review of this template because foreign exchange of N197 per dollars is very difficult to access and after consideration of extra fund being raised to obtain dollars, it is clear that the pricing template will not support the growth of petroleum marketing companies at a time there is much competition for fund from banks as a result of forex policy of the Central Bank of Nigeria (CBN).”
The Chairman of All Progressives Congress (APC)?, Chief John Odigie-Oyegun, last Thursday said the presidential directive to the PPPRA to adjust its pricing template to reflect competitive and market driven components should be supported. “A review of PPPRA’s pricing template will? result in a more efficient and realistic pricing system for petroleum products and also ensure constant availability of fuel nationwide.”