The federal government has formally stopped the payment of subsidy to oil marketers for the importation of premium motor spirit (PMS), otherwise called petrol and household kerosene, DailyTrust reports.
Following the analysis of the Petroleum Products Pricing Regulatory Agency (PPPRA) revised pricing template displayed on its website, as of January 1, 2016, the government was no longer paying subsidy for the importation of any petroleum products.
The recent pronouncement of the stoppage of subsidy payments by the Minister of State for Petroleum Resources, Dr Ibe Kachikwu, was due to the prevailing low price of crude oil in the international market.
It implies that the government will not be paying subsidy to marketers until March 31, 2016 when a review of the pricing template is expected to be done. But the minister might call for a review before then if there is a major change in the price of oil in the international market.
The negative subsidy, according to the Executive Secretary of the PPPRA, Farouk Ahmed, who announced the new pricing template, meant government will recover the difference from the marketers.
He explained, “The open market price is N86.29k. If you do the calculation, that means there is an element of over-recovery and what we will do now is that we will go back to the marketers and bill them for the recovery. With regards to the NNPC, their arrival is N85.93k, but they are selling at N86, so there will also be an element of over-recovery. However, we are comfortable with the numbers.”