The Minister of State for Petroleum, Ibe Kachikwu, on Wednesday offered explanations on why the Federal Government decided to removed subsidy on petrol and consented to jerking up the price.
Available information on Wednesday had it that the Federal Government has given importers the latitude to sell at any price but not above N145.
Before now, while government-run Nigerian National Petroleum Corporation sold petrol for N86, others were selling for N86.50.
Explaining the rationale behind the decision to remove subsidy on petrol, Kachikwu said it was the only way out of the exorbitant prices that Nigerians were subjected to buying the commodity at many filling stations across the country.
After a meeting chaired by Vice President Yemi Osinabjo which also had various stakeholders, including the leadership of the National Assembly, Nigerian Governors Forum and Labour Unions, Kachikwu said: “The reason for the current problem is the inability of importers of petroleum products to source foreign exchange at the official rate due to the massive decline of foreign exchange earnings of the Federal Government.
“As a result, private marketers have been unable to meet their approximate 50 per cent portion of total national supply of PMS.”
Speaking with State House correspondents, Kachikwu added: “We have just finished a meeting of various stakeholders presided over by His Excellency, the Vice President of the Federal Republic of Nigeria.
“The meeting had in attendance the leadership of the Senate, House of Representatives, Governors Forum and Labour Unions.
The meeting reviewed the current fuel scarcity and supply difficulties in the country.
“The exorbitant prices being paid by Nigerians for the product.
“These prices range on the average from N150 to N250 per litre currently.
“The meeting also noted that the main reason for the current problem is the inability of importers of petroleum products to source foreign exchange at the official rate due to the massive decline of foreign exchange earnings of the federal government.
“As a result, private marketers have been unable to meet their approximate 50 per cent portion of total national supply of PMS.
“Following a detailed presentation by the Honourable Minister of State for Petroleum Resources, it has now become obvious that the only option and course of action now open to the government is to take the following decisions:
“In order to increase and stabilise the supply of the product, any Nigerian entity is now free to import the product, subject to existing quality specifications and other guidelines issued by Regulatory Agencies.
“All Oil Marketers will be allowed to import PMS on the basis of FOREX procured from secondary sources and accordingly PPPRA template will reflect this in the pricing of the product.
“Pursuant to this, PPPRA has informed me that it will be announcing a new price band effective today, 11th May, 2016 and that the new price for PMS will not be above N145 per litre.
“We expect that this new policy will lead to improved supply and competition and eventually drive down pump prices, as we have experienced with diesel.
“In addition, this will also lead to increased product availability and encourage investments in refineries and other parts of the downstream sector.
“It will also prevent diversion of petroleum products and set a stable environment for the downstream sector in Nigeria.
“We share the pains of Nigerians but, as we have constantly said, the inherited difficulties of the past and the challenges of the current times imply that we must take difficult decisions on these sorts of critical national issues.
“Along with this decision, the federal government has in the 2016 budget made an unprecedented social protection provision to cushion the current challenges.
“We believe in the long term, that improved supply and competition will drive down prices.
“The DPR and PPPRA have been mandated to ensure strict regulatory compliance including dealing decisively with anyone involved in hoarding petroleum products.”