– The federal government has reintroduced
the payment o subsidy on petroleum
– The source of this information is the
latest data from the Petroleum Products
Pricing Regulatory Agency (PPPRA)
– The issue of subsidy has been a
reoccurring one in Nigeria’s economy
Latest data from the pricing templates of
the PPPRA, has revealed that the federal
government has reintroduced the payment of
subsidy on kerosene to the tune of N1.17 for
every litre of the product consumed across
the country.
Mr Ibe Kachikwu had insisted that the
federal government never terminated petrol
and kerosene subsidy earlier in the year
The PPPRA is the agency of the federal
government that fixes and regulates the
prices of white products like petrol and
kerosene, as well as other refined petroleum
products across the country.
Earlier this year, the PPPRA’s price template
for the product, which is a common
household energy source, had indicated that
there was no more subsidy on the product, a
development which many had seen as an
indication of the end of the subsidy regime.
However, minister of state for petroleum
resources, Dr Ibe Kachikwu had insisted that
the federal government never terminated
petrol and kerosene subsidy, and that the all
the move was simply a modulation of the
prices of the commodities in view of the
global price crash in oil prices.
The latest figures from the PPPRA has lent
credence to this, with the commencement of
subsidy payment likely predicated on the rise
in the price of crude oil to $40 per barrel.
The figures revealed that the expected open
market price (true cost) of kerosene at
filling stations run by independent/major oil
marketers was N84.17 per litre, as against
the official approved retail pump price of
N83 per litre at which the outlets are
mandated to sell the product.
The PPPRA also stated in its template that
the government was making an under
recovery of N1.17 on every litre of kerosene
consumed in the country; meaning that the
commodity is being subsidised to the tune of
N1.17 by the government.
In a related development, global prices of oil
rose for a third straight day yesterday, March
17 a development that has seen a rise in the
price of Brent crude, against which Nigeria’s
oil is priced, to $42.29 dollars, $4.29 higher
than the country’s proposed benchmark of
$38 for the 2016 budget.
While some may see this as a welcome
respite in the face of the nation’s dwindling
revenue occasioned by the earlier crash in
oil prices, others might see the rising prices
more as a hindrance to the fulfillment of the
nation’s potentials as government may revert
to its over-dependence on oil proceeds.
The federal government has made several
pledges to diversify the nation’s economy
and develop other sources of revenue that
will rival the oil sector, with emphasis on the
agricultural and solid minerals sectors as
possible replacements for the oil cash cow.
Also, Vice President Yemi Osinbajo, earlier
this year, had described the dwindling oil
prices as a blessing as it allowed the federal
government free up about $5 billion which
would have been paid as subsidies to
petroleum importers.
However, the re-surging oil prices, while
signaling an improvement in the country’s
finances, may also mean that the
government will jettison the efforts at
economic diversification as the petrol dollars
begin to roll in once again.
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