The minister of state for petroleum resources, Dr. Ibe Kachikwu has disclaimed his earlier hint that petrol may sell above N175 per litre because of the disparity between the pump price and landing cost of the product.
It would be recalled that while making a presentation at a public hearing on the fuel crisis jointly organised by the Senate and House of Representatives on Thursday January 4, Kachikwu had described as “shameful” government’s failure at getting oil sector businesses right.
“We need to address the issue of pricing. If we are going to sell at N145 per litre, we are going to put mechanisms in place, so that the private sector can go back into importation. The landing cost of the product is about N170 to N171. The price at which we sell today is N145. So, there’s a disparity between N171 and N145. What this means is that those individuals who are really there, not with an obligation like NNPC which has to meet national supply, but with a commercial bend, will not bring in products or they are going to sell at a loss.
“We need to free the marketers to do their business. To do their business, we need to address the pricing issue. One model, for example, is at the time we got the approval of N145, the exchange rate was N285 to $1. Today, it is N305. So, even at the minimum, there’s a gap. One mechanism will be to work with the Central Bank of Nigeria in terms of exchange rate mechanisms.
“We are looking at whether, theoretically, you could respect the N145 per litre price and have a plural pricing system, so that NNPC and all its stations and affiliates sell at N145. And at the same time, the private marketers are able to bring in product at their own cost and sell.
“As long as prices are hovering around N350 per litre on the borders and we are hovering at N145, there is a huge incentive to export product illegally. We have not been able to police our borders properly. Trackers must be placed in every truck that is carrying product in this country.
“You also need to deal with the infrastructural deficit issues. If we cannot repair our pipes at the speed at which we want, we will need to bring in the private sector and concession some of these pipelines, so that they can repair them and put them to use, so that in moments of emergency, we will not go through this kind of problem,” he said.
However, he said today that the mandate of the president is to ensure that N145 petrol pump price was maintained.
Speaking in Abuja, the minister who was reacting to social media comments which credited him as saying the price of petrol might be increased to N180 per litre.
“There are social media commentaries implying that when we met with the committee set up by the senate president to review the causative factors of the fuel scarcity and find solutions, there was a statement credited to me that said that price might be increased to N180.
“No such statement was made; no such plan is intended. “I needed to clarify this, because sometimes, some of these rumour mongering all add to the difficulties NNPC had in terms of being able to control price speculation.
“The president mandate on this issue is very specific: we are not increasing price from N145,” he said.
He said that the essence of the meeting on Thursday and the committee meeting still going on was to find mechanisms to ensure that fuel queues do not come back to Nigeria.
According to him, part of the meeting is also to ensure the wetting of all the stations so that product is available at every time for Nigerians.
“Also, that private marketers that had pulled out from participation, that we deal with their problems, so that they can participate effectively in the supply of petroleum products in the country, all within the parameters o f N145 per litre pump price.
“I thought we should make this very clear. This is not a matter for speculation; anybody who does speculation on it is not being helpful to Nigerians; that they have already gone through a very difficult Christmas period.
“We are working night and day to try and find solutions,” he said Kachikwu frowned at those politicizing the issue as government was working hard to provide succour to Nigerians and to provide product at N145.
“I have reacted to this; I think it is very important to make this go universally clear.
“We are actually looking at steps for those who have breached these processes, what we can do to penalise them and also set very stiff penalties for those who go to sell above N145,” he added
The Minister said that going forward, after the recommendations from the committee, they would be very massive enforcement and very firm position on this issue.
He said that there would be very firm tracking of product in the country adding that nobody deserved the sort of up and down in terms of product supply in this country.
“I want to make that very clear, there is no discussed intended price increase issue; price is N145 per litre at the pump price; it remains that; nothing has changed; there is no mandate to increase that.
“But we are working very hard, to see that, working with those price parameters, we can provide Nigerians with refined petroleum products all the time, avoid fuel queues and ensure that our business partners in the private sector participate actively,” he said.
Kachikwu further noted that there was no multiple price-fixing environment where people could work outside the umbrella of what had been fixed.
He said that what was approved was a modulation between N135 per litre and N145 per litre.
He noted some marketers sold at N143, the majority sold at N145.
“Some recalcitrant individuals sold above that and that is why the law needs to go after them. There is no authorization to modulate outside the N135 – N145 bracket. Nobody is free to set price above that,” he said.
Commenting on the role of Petroleum Products Pricing Regulatory Agency (PPPRA), he said that they regulate the template and help in monitor importation into the country.
This, he said helped to ensure the proper volumes of products that come into the country. He added that the template had always been an issue, because as prices change in the international market, some of this template become questionable.
“There are two lines over this template — there is the actual cost of landing the product on the template and there are other ancillary charges, dealing logistics, profit margins for the operators and all that, which are the below the line elements.
“As part of this committee’s work, we are also reviewing that template to see whether there are things we need to do, all to help us ensure that we can accommodate sales at the N145 per litre window.
“That is also going to be looked at. PPPRA is working on that and it is heading a special committee on it,” he said.