The Petroleum Products Pricing Regulation Agency (PPPRA) on Tuesday said the federal government is not subsidizing premium motor spirit (PMS), but only modulating it.
In a statement by Sotonye Iyoyo, PPPRA acting executive secretary, the agency said there is no room for subsidy in the 2016 budget, hence no subsidy is being paid.
“Contrary to reports by a section of the Nigerian media, the federal government has not reversed its decision to remove subsidy on Premium Motor Spirit (PMS), moreso when there is no appropriation for subsidy in the 2016 budget,” the statement read.
“The PPPRA wishes to state categorically that what still exists is price modulation policy, through which it considers and reviews pump price of PMS quarterly.
“The Agency also wishes to assure Nigerians that the funds from over-recovery in the first quarter (Q1) shall be duly utilized for whatever noticeable imbalance in April 2016 in line with the price modulation principle.”
The agency appreciated Nigerians for their patience on the fuel crisis, adding that “the PPPRA wishes to reiterate its commitment to ensuring seamless supply and distribution of petroleum products in the Country”.
Based on the price modulation principle, the price of PMS for the month of April should be N92.34 per litre, but PPPRA says the federal government would fund the “imbalance” of N5.84 on every litre sold.
With a consumption level of at least 33 million litres per day, the federal government will pay N5.782 billion on subsidies in April alone – if the template remains unchanged.
Considering that subsidy was excluded from budget 2016, PPPRA would have to pay N5.84 on every litre of petrol sold in April, from the over-recovery – the excess made when Nigerians were paying more than the open market price – in the first quarter of the year, meaning Nigerians are getting PMS at a pump price over the official N86.50 per litre across the nation.
