During a news conference in Abuja, on Tuesday, the Executive Secretary of the Petroleum Product Pricing Regulatory Agency (PPPRA), Mr. Farouk Ahmed, announced that as of January 1st, 2016 all retail stations owned by the National Nigerian Petroleum Corporation (NNPC) would sell petrol at N86 per litre while those independently owned would sell petrol at N86.5 per litre.
It will be recalled that SaharaReporters published a report which quoted Dr. Ibe Kachikwu, the Minister of State for Petroleum, as stating that the price per litre would be N85.
According to Mr. Ahmed, the new price was the result of a new template created by the PPPRA which is designed to calculate a fuel prices based upon market factors. He also noted that the price would be reviewed on a quarterly basis in order to adjust for changes in the price of crude oil.
“Since 2007, while crude oil price has been moving up and down the template remained the same.
“This made it necessary for us to introduce a mechanism whereby the template would be sensitive to the price of crude oil.
However, the template is not static, as there would be a quarterly review and if there is any major shift, the Minister of State for Petroleum Resources would be expected to call for a review, either upward or downward,” Mr. Ahmed explained.
However, the move has been met with harsh criticism by the Nigerian Labour Congress (NLC). The General Secretary of the NLC, Peter Ozo-Eson stated that the recent actions taken by the PPPRA were nothing more than, "a way for the deregulation of petrol prices through the back door." The NLC called for the government to reconstitute the board of the PPPRA and indicated that its National Executive Committee would convene during the New Year in order to best ascertain how to react to the recent actions by the government.
Meanwhile, the Executive Secretary warned that if any oil marketer was found to be selling above their assigned price they would be sanctioned by the PPPRA.
The PPPRA planned to tackle the issue of fuel scarcity by granting the NNPC 78% of the total allocated volume of oil for the first quarter. Theoretically, this would mean that the issue of fuel scarcity would be alleviated as the NNPC possesses a superior fuel distribution network in the country.
In addition, this action would mean that 78% of the oil sold in the first quarter of 2016 would be sold at the lower price of N86 per litre.