Vice President Prof. Yemi Osinbajo has offered explanations on the current fuel pricing regime which has made the pump price of petrol increase to N145 per litre.
“I have read the various observations about the fuel pricing regime and the attendant issues generated. All certainly have strong points,” Osinbajo said in a statement.
“Permit me an explanation of the policy. First, the real issue is not a removal of subsidy. At $40 a barrel there isn’t much of a subsidy to remove. In any event, the President is probably one of the most convinced pro-subsidy advocates.
“What happened is as follows: our local consumption of fuel is almost entirely imported. The NNPC exchanges crude from its joint venture share to provide about 50% of local fuel consumption. The remaining 50% is imported by major and independent marketers.
“These marketers up until three months ago sourced their foreign exchange from the Central Bank of Nigeria at the official rate. However, since late last year, independent marketers have brought in little or no fuel because they have been unable to get foreign exchange from the CBN. The CBN simply did not have enough. (In April, oil earnings dipped to $550 million. The amount required for fuel importation alone is about $225million!) .
“Meanwhile, NNPC tried to cover the 50% shortfall by dedicating more export crude for domestic consumption. Besides the short term depletion of the Federation Account, which is where the FG and States are paid from, and further cash-call debts pilling up, NNPC also lacked the capacity to distribute 100% of local consumption around the country. Previously, they were responsible for only about 50%. (Partly the reason for the lingering scarcity).
“We realised that we were left with only one option. This was to allow independent marketers and any Nigerian entity to source their own foreign exchange and import fuel. We expect that foreign exchange will be sourced at an average of about N285 to the dollar, (current interbank rate). They would then be restricted to selling at a price between N135 and N145 per litre.
“We expect that with competition, more private refineries, and NNPC refineries working at full capacity, prices will drop considerably. Our target is that by Q4 2018 we should be producing 70% of our fuel needs locally. At the moment even if all the refineries are working optimally they will produce just about 40% of our domestic fuel needs.
“You will notice that I have not mentioned other details of the PPRA cost template. I wanted to focus on the cost component largely responsible for the substantial rise, namely foreign exchange. This is therefore not a subsidy removal issue but a foreign exchange problem, in the face of dwindling earnings,” Osinbajo stated.
He also noted that the most important issue “is how to shield the poor from the worst effects of the policy”. This, he said, he would address in a future note.
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Posted: at 13-05-2016 10:15 PM (8 years ago) | Addicted Hero
Nottingham at 13-05-2016 11:11 PM (8 years ago) (m)
Osibanjo u are now speaking like a lecturer convincing us to believe u.kindly help us know your allowances from travel, to domestic don't border telling us about salary because we know u don't touch it for anything. Every politician is earn more than they spend while the idea of minimum wage was ignored. The rich is either you are a politician or into oil business.no good school or hospital. Osibanjo u all are beasts and blood suckers. We can bear if u can stop allowances and depend solely on your salary to take care of your family education, hospital...etc
Posted: at 13-05-2016 11:11 PM (8 years ago) | Upcoming
This is outrageous ! Governmrnt should put in place other considerable factors before implementing a new pricing policy .If course ,it' doesn't take so much expertise to know how the effect of this policy will hard landed on other sectors of people daily lives.The government knew the hardship impact of this policy but promised to address this aspect in the future .It shows how much the government put its citizen first before stabilizing the issue of scarcity.It looks like this government is losing it and therefore ignoring the human side of their campeign promises .Neverthrless ,Nigerians should keep faith in Buhari ,his hands are tied and that's true.Inherited a virtually empty treasury coupled with hard landing economy ,global plummeting of crude price and global economy meltdown .But in all these the government could take B plan to stabilize the hardship caused by dwindling revenue and not increasing gas prices without looking into other factors .Nigerians are resilent people but government shouldn't take advantage .Minimum wage issue should be addressed and interest bank interest rate should be addressed to curb inflation .Otherwise ,this new gas price will drain the little earnings from Nigerian through inflation .Of course ,prices of commodities will sky rocketed to maximum ,since transportation of goods is essential in agricultural produce,workers won't walk to offices .
Spare me
Posted: at 13-05-2016 11:43 PM (8 years ago) | Gistmaniac
CHRISETTE at 14-05-2016 06:27 AM (8 years ago) (f)
You just keep telling story while Nigerians are subject to hardship everyday and you come out not to relieve our pain but to tell us unwarranted stories,keep your stories to your self mr vp.
Posted: at 14-05-2016 06:27 AM (8 years ago) | Hero
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