Minister of Petroleum Resources, Rilwan Lukman had said a few weeks ago that the federal government would by Novemeer remove subsidy on pump price of petroleum products in the country to enable government use the subsidy funds in other productive sectors.
It was gathered yesterday that if the government goes ahead with its plan, a litre of petrol would go for N103 per litre and kerosene N108 per litre at the prevailing international market. The two major products are currently subsidised by government to tune of N200 billion monthly and about N2 trillion in the past four years
Petrol currently sells for N65 and kerosene officially N50, but the pricing of diesel and jet fuel had been deregulated since over three years ago. Most marketers sell diesel at N150 per litre after it was deregulated.
According to official figures, N255.74 billion and N290.47 billion were spent on subsidies in 2006 and 2007 respectively.
According to a price template by PPPRA and based on crude oil price in the international market, hovering around $75 per barrel, as at Thursday, a litre of petrol goes for N103.34 per litre and at a landing cost of N90.14 per litre while kerosene sells forN108.07 and at a landing cost of N90.78 per litre.
It was also gathered that the Federal Government had directed the Department of Petroleum Resources (DPR) to suspend importation of kerosene pending the full deregulation of the sector.
As a result of this major and Independent oil marketers have stopped kerosene importation except the Nigerian National Petroleum Corporation. Currently, a litre of kerosene goes for between N100 and N120 per litre in most part of Lagos State.
A chief executive of one of the major oil firm told Daily Trust yesterday that they have not imported kerosene into the country since June as a result of government directive to DPR not to honour marketers’ letter of permission for import.
He said the fear of government is that if marketers continue to import, it would make none sense of the proposed full deregulation policy as government would be made to pay subsidy on the imported product.
He said kerosene consumers would have to bear the consequences pending the time government would resolve the deregulation policy issue.
The executive secretary of Major Oil Marketers Association of Nigeria (MOMAN), Femi Lawore said yesterday that pump price of petrol would likely go for N100 per litre based on prevailing international price if the market is fully deregulated.
He said though the Petroleum Products Regulatory Agency (PPPRA) still owes the marketers over N22 billion subsidy arrears and another N24 billion foreign exchange loss, government is yet to discuss with the marketers on the policy.
He said if the market is fully deregulated and the crude oil price remain the same, Nigeria will pay up to N100 per litre.
In 2008, N654.76 billion was spent on subsidies, representing 133 per cent of the size of the Federal Government’s capital expenditure, while N602.51 billion was spent on subsidies this year.
The projected subsidy payment for 2009 is about 133 per cent of the amount devoted to critical infrastructure.