The outgoing Executive Secretary of the Petroleum Products Pricing Regulatory Agency, PPPRA, Mr. Farouk Ahmed, yesterday, stated that the Federal Government was considering a review of the pricing template for Premium Motor Spirit, PMS, and might effect a further reduction in the price of the commodity from April 2016.
Speaking in Abuja, Ahmed, who officially handed over to the most senior officer of the PPPRA, Mr. Moses Mbaba, also disclosed that as at February 3, about one month after the commencement of price modulation which led to the review of the pricing template of petrol, the country had saved N2.6 billion.
According to him, the decision on the review of the price of PMS would be taken next month by the Minister of State for Petroleum Resources, after due consultations with stakeholders and based on the price of crude oil in the international market.
“Yes, wait till March, you will see because the minister is fair in the decision he will take; because he will take the decision pragmatically,” Ahmed responded, when asked about the possibility of a likely reduction in the price of PMS. In addition, Ahmed stated that due to the current state of over-recovery, the PPPRA is recovering some money from the Nigerian National Petroleum Corporation, NNPC, and oil marketers.
He noted that as at February 16, 2016, over-recovery was N13.81 per litre, stating that an over-recovery of N13.81 meant that the landing cost of PMS was lower than the selling price by N13.81.
However, as at the close of business yesterday, the over-recovery recorded by the country had dropped to N11.74 per litre, according to data obtained from the PPPRA website. Ahmed said in instances of over-recovery, the PPPRA sent debit notes to every marketers that fell within that bracket to refund the excess money to the government, adding that the fund was kept in an account recently opened at the Central Bank of Nigeria, CBN.
He said: “There has been an account launched at the CBN, managed by the Accountant-General of the Federation (AGF) where the over recovery funds are deposited into. So there is no question of where the money goes to. “As at February 3, 2016, the estimate in that account, because we are verifying based on what was imported, is just a small amount of about N2.6 billion. But this is just the beginning because some of them are just arriving in December, that is why the subsidy over recovery is low.”
Continuing, he said, “The fact is that whatever money that will be put into that account, one day, which is our hope that the price of crude oil will go up, there would be more revenue inflow to the federation account. The oil sector will benefit. That excess, before you go to government for any intervention, you go to that account and pull some money and compensate.”
However, he noted that the over-recovery might disappear if the price of crude oil rose by next month. He disclosed that the process of the review of the pricing template would likely commence by March 15, and the committee to undertake the review would consist of all the stakeholders in the segment of the petroleum industry, including major and independent oil marketers and also depot owners. Furthermore, Ahmed commended staff of the PPPRA, especially the agency’s branch of the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, for their support, cooperation and peaceful co-existence during his stay at the agency. He stated that during his tenure in the PPPRA, they were able to introduce strict products importation reform measures which had helped in greatly checking the fraudulent tendencies of some of the marketing companies.
He said, “Furthermore, the recent price modulation mechanism and review of the PPPRA pricing template which took effect from January 1, 2016, has ushered in the much-needed efficiency and cost-saving as far as subsidy payment exposure is concerned. This has partly led us to a regime of over-recovery enabling the government to collect money back from the marketers into the designated over-recovery account at the CBN.” He, however, urged the staff of the agency to selfless in discharging their duties for their job security and for the survival of the PPPRA.