FROM DENNIS MERNYI, ABUJA
The Petroleum Products Pricing Regulatory Agency (PPPRA) has explained that even with the pump price of N87 per litre recently announced by the Federal Government, it is still subsidising the pump price of petrol in favour of consumers.
The Executive Secretary of PPPRA, Mr. Farouk Ahmed, who made the clarification in a press statement in Abuja at the weekend, stated that the price of crude oil dropped to a point where the open market price of petrol also fell to a level the government considered appropriate to relieve some of the burden imposed on Nigerians by the knock-on effect of the dwindling price of crude oil on the economy.
According to him, the price of crude oil averaged $62 in December 2014 and dropped to an average of $50 per barrel for the first half of January 2015. It was after a consistent and diligent monitoring of the trend, since the beginning of the current drop in crude oil price that government was able to confirm its ability to reduce the pump price of gasoline commensurate with the amount announced. He explained that even at the lowest crude oil price of $47.23 recorded on January 16, 2015, the open market price of petrol was about the same as the erstwhile price of N97/litre.
“What this means is that at the new price of N87 per litre, government is still subsidising the pump price of petrol,” Ahmed explained.
On the argument that the price of crude oil has reduced by about 50 per cent and so the pump price of petrol must reduce in the same ratio, Ahmed explained that crude oil price is only one of the several components in deriving the pump price of petrol. Therefore, there is no linear relationship between the price of crude oil and the pump price of petrol, adding that when the price of crude oil reached its peak of $114.26 per barrel on June 18, 2014, the open market price of petrol was N157, but government still maintained the regulated price of N97 per litre and subsidised the difference of N59.51 per litre.
Source : SunOnline
