P
ProfRem
Guest
Federal government is ready to re-visit the pricing modulation model introduced in 2016 and remove the multi-layer charges on importation of petroleum products to maintain the pump price of petrol at the current N145 per litre.
The Minister of State for Petroleum, Dr. Ibe Kachikwu while speaking in Lagos on Wednesday at the 20th anniversary lecture of Rainoil Limited, disclosed that the government was working to ensure that NNPC reduces its charge on the pro-forma invoice, which is the allowance for ship-to-ship (STS) transfer operations on imported cargoes from the current five per cent to one per cent, so as to reduce the burden on fuel marketers.
He noted that when the non-availability of forex and inability to raise letters of credit forced private oil marketers to stop importation in the first and second quarters of 2016, President Muhammadu Buhari encouraged the petroleum ministry to take the bullish decision of partially liberalising the downstream sector and eliminating subsidy by adjusting to the N145 pump price.
According to him, when the N145 pump price was fixed, the price of crude oil in the international market was between $25 and $30 per barrel.
“Today, the environment has changed since we took those steps because back then, crude was selling between $25 and $30 per barrel. But today, crude is over $50 per barrel, which means that the federation’s revenue stream is improving.
“But whenever the price of crude goes up, as a fuel import dependent country, we see the prices of refined products go up and this comes with systemic challenges.
“Again, at this time, as crude oil rallies, we begin to see the gap begins to return, as our refined product imports become more expensive.
“Today, NNPC has almost gone back to importing almost 100 per cent to ensure supply stability in the country and this means it is obviously absorbing the cost implications resulting from the increase in crude oil prices,” Kachikwu explained.
The Minister of State for Petroleum, Dr. Ibe Kachikwu while speaking in Lagos on Wednesday at the 20th anniversary lecture of Rainoil Limited, disclosed that the government was working to ensure that NNPC reduces its charge on the pro-forma invoice, which is the allowance for ship-to-ship (STS) transfer operations on imported cargoes from the current five per cent to one per cent, so as to reduce the burden on fuel marketers.
He noted that when the non-availability of forex and inability to raise letters of credit forced private oil marketers to stop importation in the first and second quarters of 2016, President Muhammadu Buhari encouraged the petroleum ministry to take the bullish decision of partially liberalising the downstream sector and eliminating subsidy by adjusting to the N145 pump price.
According to him, when the N145 pump price was fixed, the price of crude oil in the international market was between $25 and $30 per barrel.
“Today, the environment has changed since we took those steps because back then, crude was selling between $25 and $30 per barrel. But today, crude is over $50 per barrel, which means that the federation’s revenue stream is improving.
“But whenever the price of crude goes up, as a fuel import dependent country, we see the prices of refined products go up and this comes with systemic challenges.
“Again, at this time, as crude oil rallies, we begin to see the gap begins to return, as our refined product imports become more expensive.
“Today, NNPC has almost gone back to importing almost 100 per cent to ensure supply stability in the country and this means it is obviously absorbing the cost implications resulting from the increase in crude oil prices,” Kachikwu explained.
