New fuel pump price, mere tokenism – APC

The All Progressives Congress (APC) has accused the Federal Government  of making a show out of deceit by its so-called fuel price reduction, saying a 10.3 per cent slash in the price of petrol (from 97 to 87 Naira) is a mere tokenism at a time the price of crude oil has crashed by about 60 per cent.

In a statement, Monday, in Lagos by its National Publicity Secretary, Alhaji Lai Mohammed, the party said the pump price of a litre of fuel should not be more than 70 Naira, meaning that at 87 Naira per litre, the government is forcing Nigerians to subsidize the massive corruption in the oil sector by 17 Naira for every litre of fuel.

”When crude oil was selling at 100 dollars per barrel, the landing cost of PMS without subsidy was 125 Naira per litre. Now that the oil price has crash to about 44 dollars per barrel, landing cost without subsidy is about 65 Naira per litre. The same goes for diesel which should not sell for more than 90 Naira per litre,” it said.

APC said while governments of countries which are not as economically endowed as Nigeria have reduced the pump price of fuel as far back as early January 2015, Nigeria that is the world’s sixth largest producer of oil is just announcing a price slash that is far below those countries.

”Early this year, Zambia slashed the price of petrol by 23 per cent while Tanzania reduced the pump price of the product by 16%. In the US, which until recently was importing crude oil from Nigeria, the price of fuel has fallen for 113 consecutive days

as of Jan. 16. Therefore, the 10.3% price slash in Nigeria is too meagre too late,” the party said.

It said the real reasons that the Nigerian government has delayed slashing the price of imported petroleum products following the crash in crude oil prices are the massive corruption in the oil sector and lack of political will on the part of the country’s leadership.

”With Nigeria depending on importation of petroleum products to meet about 90% of its domestic consumption, the country is relying heavily on term contracts entered into with petroleum product trading companies to meet its domestic demand. It is possible that the petroleum products pricing formulas embedded in these contracts, which generally run for up to 1-1/2 and in some cases 2 years, have not anticipated these low prices.

”Therefore, unless the government moves to renegotiate the contracts now, it may not reap the full benefits of the decline in petroleum prices. But here is the catch: Since the government and its agents have skimmed off huge ‘commissions’ from the firms with which the term contracts were signed, it could not possibly go back and renegotiate those contracts or go into new forward contracts that will reflect the current reduction in crude oil prices.