Petroleum Products Pricing Regulatory Agency, PPPRA, said yesterday that Federal Government was collecting N8 per litre as subsidy on imported petrol by the Nigerian National Petroleum Corporation, NNPC and other marketers. Giving this hint when handing over the affairs of the agency to Mr. Moses Mbaba, General Manager Administration, and Human Resources, outgoing Executive Secretary of the agency, Alhaji Farouk Ahmed, said the collection was based on the price modulation regime on imported petrol. According to him, subsidy as at yesterday had dropped to minus N8 per litre for PMS, which means that government now collects N8 for every litre imported by NNPC and marketers as against payment to them before. Ahmed explained that the subsidy on petrol was N13.81k on Tuesday, which implied that the landing cost was lower than the selling price by N13.81k.
The PPPRA boss disclosed further that based on over recovery pricing regime, the Federal Government had opened an Over Recovery Account with the Central Bank of Nigeria, CBN, since February 3 to be managed by the Office of the Accountant General of the Federation. He explained that already about N2.6bn had been lodged into the account being the over recovery payments by NNPC and marketers for December 2015 importation. Ahmed said: “As at the 12th February, 2016, because we verify base on what was imported, about N2.6bn has accrued to that account. The fund is still low because most of the cargoes arrived in December last year. PPPRA has already communicated to the appropriate authorities that we are in the regime of over-recovery.
“This is just the beginning because some of the products just arrived in December; that’s why the subsidy over recovery is low. But for those cargo that are loaded in January for example, we want the over recovery to start manifesting; then by calculation, we will begin to know what the price will be for marketers and NNPC respectively.” Commenting on review of template for price modulation in the first quarter, he said the agency was building data, which would look at the trend and analyse how the market had fared in the last two and half months. He explained that the agency would also check what the over recovery accumulated into before advising the minister, and that stakeholders in the sector would meet next week to deliberate on the development which would form part of the decisions on the price going forward. Ahmed said a committee that was initially planned to take charge of the template had to be jettisoned because the minister believed that rather than having a committee, it was better to bring every stakeholders together in a roundtable discussion to look at the trend, do a forecast and then take a decision on the prevailing facts. He noted that the price modulation review had some challenges but that these had led to the over recovery witnessed in the sector. He said: “There are a lot of things and that’s why we are into over recovery because first of all, we looked at the pricing after we reviewed the template. “
The review instilled some efficiency and cost savings and that cost savings translated into reduction of pump price even though it is 50k and N1 but it is an indication that something is working. “That is the whole essence of modulation; cut cost; be more efficient and let Nigeria enjoy the benefit of that efficiency.” Meanwhile, Minister of State for Petroleum Resources and Group Managing Director of NNPC, Dr. Emmanuel Ibe Kachickwu yesterday said the novel price modulation mechanism currently in place will ensure that the Federal Government records zero expenses on fuel subsidy in 2016 Group General Manager, Group Public Affairs Division of NNPC, Ohi Alegbe, in a statement said the minister made the forecast while delivering the 45th Convocation Lecture of the University of Nigerian, UNN, Nsukka under the theme: “The Petroleum Industry and the Future of the Nigerian National-Oil Resource Management and the Implication for National Security & Economic Survival.” Kachikwu noted that the zero fuel subsidy regime is already in place and would be sustained based on the prevailing modified pricing template for petroleum products which has eliminated extraneous cost elements. “Without necessarily removing subsidy the government will spend zero amounts in subsidy in 2016.
“This may sound unbelievable to some people but that is part of the change agenda of the present administration of President Muhammadu Buhari,” he said. The minister noted that large chunks of vandalised pipelines are being recovered which will supply more crude to refineries. The minister said despite the difficulties of yester-years, the oil and gas industry is primed for greater achievements in the months and years ahead as a result of the landmark reforms being engendered and activated by the present administration. Dr. Kachikwu outlined the central objective of the ongoing oil and gas reform agenda to include; increasing revenue for the country through sales of petroleum and petroleum products and taxes on profitable enterprises; maximising value added on crude oil and gas to establish linkages with other sectors through local processing and establishment of gas based industries thereby stimulating economic growth and development as well as providing employment opportunities for Nigerians.
“Significant improvement in governance macroeconomic and fiscal policies are key to harnessing oil and gas resources for the sustainable development of Nigeria through enshrining transparency and accountability, empowering good governance and transparency in expenditure and revenue management,” he added. The GMD also noted that the ongoing reform is designed to create competitive framework for public private partnerships anchored on durable financial investments. In his remarks, UNN Vice-Chancellor, Prof. Benjamin Ozumba said the 45th convocation lecture was unique because the lecture was delivered by a guru in the petroleum industry, who had within a record time transformed the oil sector. Describing Kachikwu as the pride and beacon of UNN, the vice-chancellor noted that the university is glad to welcome a super lion and one of the profound thinkers in Nigeria.