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Monday, May 16, 2022

Petrol price may go up 86.41% in Feb as NEC recommends N302/litre

Nigeria may hike the pump price of Premium Motor Spirit (PMS), otherwise known as petrol, to N302 per litre in February 2022 if the federal executive council approved the recommendation of the National Economic Council (NEC).

The NEC, comprising the 36 state governors, Central Bank of Nigeria (CBN) Governor, Finance and Budget Minister and other key government official and chaired by the Vice President Yemi Osinbajo was said to have recommeded the deregulated price in November 2021

The government has vowed to fully deregulate the downstream oil sector this year in a bid to recover lost revenue and boost government finance and reduce debt component of its budget.

Petrol price is currently selling between N162 and N165 per litre across the country and many Nigerians have expressed opposition against the deregulation of the pump price while labour unions are gearing for nationwide protest in the event the government make good its promise.

The recommendations were put forward by the NEC ad-hoc committee interfacing with the Nigerian National Petroleum Corporation (NNPC) on the appropriate pricing of PMS in Nigeria. The report was presented by Nasir El-Rufai, governor of Kaduna state and head of the committee, The Cable reports on Wednesday. 

The committee was established last year by NEC headed by Osinbajo to look into the dwindling revenues of states.

Other members of the committee include Godwin Obaseki, Kayode Fayemi, and David Umahi, governors of Edo, Ekiti and Ebonyi states respectively; as well as CBN governor Godwin Emefiele; and the group managing director of the Nigerian National Petroleum Corporation (NNPC); Mele Kyari; Minister of finance and budget, Zainab Ahmed.

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In May 2021, the Nigeria Governors’ Forum (NGF) had also recommended N385 per litre — but stakeholders, including the federal government, rejected the recommendation.

The recommendation has since been reconsidered and dropped by the committee.

According to the new report, the committee recommended full deregulation of PMS prices by February 2022 — raising the price by about N130/140 per litre.

It also recommended that all retailers should post PMS prices at all times on a designated website and smartphone app — and they are expected to post price changes no earlier than within 15 minutes of the price change.

With the recommendations, the committee added that the federal government would save N250 billion per month on petrol subsidy removal.

“At current rates, the PMS subsidy is reducing transfers into the federation by about NGN 250 billion per month, and could, if PMS subsidies are not eliminated, result in deductions of NGN 3 trillion in 2022,” the committee’s resolution reads in part.

“The large-scale time-limited (6-months) cash transfer proposed as a way of transferring the subsidy “directly to the people” would cost N600 billion but would by paving the way for the elimination of PMS subsidies, enable the federation to recover N3 trillion in revenues that would otherwise go to PMS subsidies.

“If PMS subsidies are eliminated by February 2022, N250 billion in deductions would have been incurred, but the remaining N195 billion in anticipated PMS subsidy deductions could be redirected towards FGN funding of the cash-transfer programme,” the NEC report stated.

The NEC committee also recommended a market-based pricing mechanism, as another option, that would ensure petrol price ceilings at least once a month.

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