Petroleum marketers yesterday began adjusting their pump meters while some stopped dispensing fuel shortly after the Federal Government announced the removal of subsidies on petrol with effect from January 1. �
Petrol would now sell at N143.56 per litre with effect from yesterday, up from N65 per litre, and the price is likely to spike as naira value dips against the dollar and crude oil price spirals in the world markets.�
The subsidy removal decision was announced early afternoon by Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Reginald Stanley, who said in a statement that government would no longer pay subsidy funds and therefore marketers were free to sell based on templates generated by the agency fortnightly.
The template on the agency?s website yesterday showed that after factoring all the associated costs of importation, petrol price comes to N143.56 per litre as at Thursday but would hover at an average of N141 a litre between January 1 and 14. PPRA is to review the template fortnightly to reflect any changes to crude oil prices and naira value.
?Following extensive consultation with stakeholders across the nation, the Petroleum Products Pricing Regulatory Agency (PPPRA) wishes to inform all stakeholders of the commencement of formal removal of subsidy on Premium Motor Spirit (PMS), in accordance with the powers conferred on the agency by the law establishing it, in compliance with Section 7 of PPPRA Act, 2004,? Stanley said.
?By this announcement, the downstream sub-sector of the petroleum industry is hereby deregulated for PMS. Service providers in the sector are now to procure products and sell same in accordance with the indicative benchmark price to be published forthnightly and posted on the PPPRA website. Petroleum products marketers are to note that no one will be paid subsidy on PMS discharges after 1st January 2012.
?Consumers are assured of adequate supply of quality products at prices that are competitive and non-exploitative and so there is no need for anyone to engage in panic buying or product hoarding.
?The PPPRA in conjunction with the Department of Petroleum Resources (DPR) will ensure that consumers are not taken advantage of in any form or in any way. The DPR will ensure that the interest of the consumer in terms of quality of products is guaranteed at all times and in line with international best practice. In the coming weeks, the PPPRA will engage stakeholders in further consultation to ensure the continuation of this exercise in a hitch-free manner.?
Shortly after the PPPRA announcement, fuel stations around the country began adjusting their meters up from N65 per litre. Many other fuel stations shut down, obviously to re-set their meters to the new price levels.
In Abuja, most of the filling stations in the city centre were not selling by 3pm, while the few that were dispensing shut up by 4 pm, claiming to have run out of fuel.
People also began rushing to the filling stations to fill up their tanks based on the old price, leading to chaotic scenes.
Labour unions, activist and politicians yesterday condemned the government announcement, which came as a surprise to many people.
President of the Trades Union Congress Peter Esele said the new petrol price means ?hell? for Nigerians, vowing that labour unions would not accept it. He said, ?To move from 65 naira to N143.36, that is hell.?
Lawyer Femi Falana said the subsidy removal was illegal because such decision would only be lawful when taken by the board of the PPPRA and that there was no such board in existence at the moment. ?Once there is no board, the price increase is illegal,? he said.
Deputy Minority Leader Rep Suleiman Abdulrahman Kawu yesterday said, ?We will use the law to stop this inhuman act. It?s another form of terrorism against Nigerians that are already impoverished.? The House of Representatives had voted to reject subsidy removal in November.
But Senate Leader Victor Ndoma-Egba said the situation did not come as a surprise. ?From the budget presentation by President Goodluck Jonathan it was evident that there was no provision for fuel subsidy,? he said.
Major Oil Marketers Association of Nigeria yesterday welcomed the subsidy removal announcement, with the association?s executive secretary Obafemi Lawore saying they would drive efforts to make the policy a success.
Nigeria produces more than 2 million barrels per day of crude oil but a lack of investment in refineries and infrastructure means almost all of this is exported, while refined fuel products such as petrol have to be imported at great cost.
President Jonathan said subsidy removal is meant to save over N1 trillion that would be used in building infrastructure.
The government has said that any increase in the cost of goods would soon be offset in the medium term by economic reforms, such as more efficient customs clearance at ports that would reduce the cost of imports.
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