According to documents obtained from the
Petroleum Products Pricing Regulatory Agency,
the actual price of petrol, has risen to N205 per
litre.
The actual price of Premium Motor Spirit, PMS, also known as
petrol, climbed to N205 per litre, according to documents obtained
from the Petroleum Products Pricing Regulatory Agency, PPPRA,
Vanguard has exclusively reported.
What this means is that if the Federal Government deregulates the
downstream petroleum industry today, petrol would be sold to
motorists by petroleum marketers at N205 per litre.
According to the documents from the PPPRA, the price of the
commodity appreciated by 8.47 per cent from N189 per litre
recorded in April 25, 2018, to N205 per litre as at May 16, 2018.
Petrol
The price had risen from N200 per litre between May 1 and May
10, 2018, to N205 per litre between May 11 and May 16, 2018.
However, the price of petrol is still fixed at a maximum of N145
per litre, meaning that Nigerian National Petroleum Corporation,
NNPC, is currently paying N60 as under recovery for a litre of the
commodity.
National Bureau of Statistics, NBS, had in its Petroleum Products
Imports and Consumption (Truck Out) Statistics for the first
quarter of 2018, stated that 4.89 billion litres of PMS was
distributed nationwide in the first three months of the year.
This translated to an average consumption of 54.33 million litres
of PMS daily.
To this end, using an average of 50 million litres of PMS
consumption daily, the NNPC is therefore, incurring an under
recovery of N3.26 billion daily and N97.8 billion on a monthly
basis.
Confronted with the rising price of PMS and rising under-recovery
payments, Group General Manager, Group Public Affairs Division of
the NNPC, Mr. Ndu Ughamadu, told Vanguard that “an issue is
obvious: the higher the price of crude oil, the higher the price of
products on the international market and the higher the landing
cost. By extension, therefore, the higher our under recovery.”
Under-recovery, in downstream petroleum marketing parlance, is
when the expected open market price of PMS is below the
approved official retail price at the pump.
The expected open price is a combination of the cost of
importation and distribution of the commodity, such as marketers’
margins, landing cost and freight cost. Under recovery is another
name for subsidy, because it occurs in a situation where the
selling price is lower than the actual cost of a product.
The difference with this current system of subsidy payment is the
fact that the NNPC is making the payments to itself and not to
other oil marketers as was the case in past subsidy regimes, since
it had been the major importer and supplier of Premium Motor
Spirit, PMS, also known as petrol, over the last couple of months.
Furthermore, giving the rationale for the sharp rise in the price of
PMS, the PPPRA reports disclosed that during the week under
reference, between May 11 and May 16, 2018, oil prices continued
to soar high, stating that the average price for Brent Dated was
$77.92 per barrel, Bonny Light, $78.08 while West Texas
Intermediate, WTI, was $60.27 per barrel.
It added that the highest crude price, Brent Dated, for the week
was $78.76 per barrel, which was recorded May 15, 2018.
It noted that within that same period, the Naira exchange rate at
the Central Bank of Nigeria, CBN, fluctuated between N305.75 to a
dollar and N305.85 to a dollar, while the parallel market rate was
stable at N363 to a dollar.
In addition, the documents noted that the freight rate of the
reference route UK-WAF recorded a slight decline during the week
to end with an average of $20.36 per metric tonnes of the
commodity.
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