editorial
The Federal Government last week announced a reduction of the pump price of Premium Motor Spirit (PMS), otherwise called petrol from N97.00 to N87.00 per litre. The reduction, which was announced by the Minister of Petroleum Resources Mrs Diezani Alison-Madueke, was meant to take immediate effect. She also directed the Petroleum Products Pricing Regulatory Agency (PPPRA) to ensure that marketers adjust to the new price regime. The reduction came as a response to the falling price of crude oil, which has been on a steady decline in the international market since June 2014.
It is instructive that other countries of the world, oil producing and non-oil producing ones alike, had cut down their petroleum products’ prices immediately the crude oil price plunged. As a matter of fact, India has cut its PMS price about seven times since August last year to reflect the contemporary international price of crude oil. The Federal Government’s reduction is coming rather late and after much agitation from the public. Moreover it only affects petrol and not other by-products of crude oil like Household Kerosene (HHK) and Diesel Motor Oil (DMO).
The percentage cut in price also does not reflect the percentage fall in the price of crude oil. In 2012 when the price of PMS was fixed at N97.00, crude oil sold at over $ 100 per barrel and reached a peak of $ 125 per barrel by early March. The argument then was that the price of crude had increased. However, now that the price of crude oil has plunged by over 50 per cent, expectations are that there would also be a corresponding reduction in the pump prices. This newspaper however feels that government should not see this slight reduction in pump price as an excuse to increase the pump price of PMS when the price of crude oil appreciates.
Unfortunately, the reduction, which is meant to provide some succour to Nigerians, has not really had any effect because some marketers have defied the directive to reduce the pump price of PMS. It needs to be stated that the action of the marketers smacks of insensitivity to the plight of Nigerians. Their argument that they were not carried along in the decision and that they have yet to dispose of their old stock cannot fly because in the past when the pump price was increased, they were not consulted in advance, even as they also adjusted their prices upwards immediately without first disposing of the old stock. If the situation had been the other way and oil prices were to rise, these marketers will immediately adjust their diesel prices. The Federal Government, through the PPPRA should therefore take immediate action to bring marketers who continue to sell petrol above the recommended price of N87.00 to book.
The 2015 budget was initially prepared based on crude oil benchmark of $ 78 per barrel before it was scaled down to $ 65 per barrel even with provision made for fuel subsidy. However, with the plunge in the price of crude oil, the Federal Government’s spending on petrol subsidy has equally fallen. In fact, the provision for fuel subsidy as contained in the 2015 budget proposal is N291bn, down by N680bn from the N971bn approved for 2014. Presently, the government pays just 90 kobo as subsidy for a litre of petrol. In the light of this development, it is expected that government should use the excess funds that it had earlier budgeted for fuel subsidy to address other areas of need.
