The marginal rise in the price of crude oil in the international market has led to an increase in the actual cost or Expected Open Market Price of the Premium Motor Spirit, popularly called petrol in Nigeria.
The EOMP or true cost of the petrol as of Thursday, according to figures from the official pricing template of the Petroleum Products Pricing Regulatory Agency, was N96.31 per litre. But the official retail price of the product at filling stations is N86.5 per litre, leaving out an under-recovery or difference of N10.31, which is being catered for by the government through its previous savings or over-recovery made on the product. Should the government exhaust its savings (over-recovery) to offset the difference in the petrol price as currently being experienced, it was gathered that the Petroleum Products Pricing Regulatory Agency (PPPRA) would have to adjust the template to reflect the actual market cost of the product. And by implications, consumers may have to pay more for petrol.
Various pricing templates of the Agency, before last Thursday’s, had shown the government’s over-recovery on the PMS during periods of low crude oil price. However, as the international price of crude oil begins to appreciate, the government is already experiencing under-recovery on the PMS, as shown by the PPPRA templates.
Earlier in the year, the crude oil price hovered around $40 per barrel. But recently, it started to appreciate as data from the Nigerian National Petroleum Corporation showed that as of April 8, 2016, the price of Brent Crude was $44.69 per barrel.
However, the PPPRA recently announced that the Federal Government had not reversed its decision to end petrol subsidy payment, arguing that there was no appropriation for subsidy in the 2016 budget.
The acting Executive Secretary of the Agency, Mrs. Sotonye Iyoyo, had said, “The PPPRA wishes to state categorically that what still exists is price modulation policy, through which it considers and reviews pump price of the PMS quarterly.”
“The Agency also wishes to assure Nigerians that the funds from over-recovery in the first quarter shall be duly utilised for whatever noticeable imbalance in April 2016 in line with the price modulation principle.”