Moves to address the lingering fuel crisis continued at the weekend with the Federal Government considering the recommendation of the Presidential Committee on Deregulation on the appropriate pricing of petrol.
The current template of the Petroleum Products Pricing Regulatory Agency (PPPRA) puts the cost of imported petrol at N85 per litre while the pump price is N65, respresenting N20 subsidy per litre.
The committee, headed by Bauchi State Governor Isa Yuguda, is seeking to knock off N8 per litre from the template price because of “identified leakages”.
It also emerged that the government has taken measures to address identified hiccups in the operations of the downstream sector by raising the approval limits of the Group Managing Director of the Nigerian National Petroleum Corpo-ration (NNPC) to $20 million.
Currently, the marketers, who import more than half of the petroleum products into the country, have stopped importation because of issues relating to subsidy payment and “unstable policy environment”.
The PPPRA template consists of landing cost, margins for marketers, dealers, transporters, jetty depot through-put, taxes and demurrage.
But marketers are understood to be pushing for N100 per litre to cover their costs and stop further reliance on subsidy in line with government’s deregulation policy.
However, the presidential panel has recommended that the PPPRA N85 template pricing is “bloated” and should not be more than N77 per litre – which is still N12 above the current official price.
If this recommendation is accepted, the price of petrol will go up, but it may still not please the marketers who argue that it does not cover their costs.
Indeed, indications are that the end of the fuel crisis is not yet in sight following difficulties in getting oil marketers to make products available to consumers.
THISDAY gathered that the recommendation by the Presidential Committee for the reduction of price by N8 may further aggravate the problem as the marketers are opposed to the idea.
The thorny relationship between the marketers and the government was aggravated last year by the declaration by the government that Nigeria had been subsiding corruption with the official policy of fuel subsidy because of untoward activities between the PPPRA and marketers.
The stoppage of the payment of the subsidy has contributed to the current fuel crisis, with a national officer of the ruling Peoples Democratic Party (PDP) accusing some marketers of trying to blackmail the government over the issue.
Meanwhile, following the granting of the new approval limits to the GMD of NNPC, the Federal Government has directed the corporation to immediately commence action to reactivate the refineries and to do everything necessary to restore normalcy in petroleum product supply.
The move to ease up the hold on the NNPC is said to have come as a response to complaints, reported by THISDAY last Friday, that the long process in obtaining approvals for minor expenditures is stifling the operations of the company.
The source said government decided to accede to requests for upwards review of contract approval limits from $50,000 (N5 million) to $20 million because of its determination to address the inadequacies of the domestic petroleum sector, especially the issues that led to the near-grounding of our four refineries.
The four refineries together are said to be performing at less than 20 per cent at present with most of the facilities in dilapidated conditions.
Part of the reasons given by the management of NNPC to explain its predicament over the lingering misfortune trailing the refineries are that the chief executives of the refineries are most times incapacitated by lack of funds to effect needed repairs on the facilities.
Approvals for funds to carry out routine operational maintenance at the refineries most often lasts as long as five years, in which case the MDs are forced to go through a financial vendor to enable them obtain supplies of materials for the repair pending the release of funds.
“Bureaucratic bottlenecks in sourcing of funds for the running of the refineries have been largely responsible for the inability to keep the refineries in good functional state and to reduce the country’s dependence on imports,” it said.
THISDAY gathered that the Presidency was moved by the desire to support efforts that would speedily restore stability in the downstream sector.
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