Controversy over renewed fuel subsidy: Recurring aberration

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WHY has it become so difficult in this country to use common sense to address the problems confronting us in all facets of our life as a nation? And for how long is Nigeria going to bow to criminality? How do you reconcile that barely three months after we were told it was stopped in January following the review of the pricing template of the product, the Federal Government on Saturday 1st April 2016, brought back subsidy on premium motor spirit otherwise known as petrol?

Since subsidy has been identified as an unnecessary drain in public treasury benefiting only a few privileged individuals, the government discarded it and everyone was happy. By law of cognitive dissonance, was it not insulting to our sensibilities to reintroduce this scam again or is the present government saying it has discovered the scheme was not a scam afterall?

Do we still need a seer to now tell us that something is surely wrong at or rather with the NNPC and everything oil in this country that urgently needs to be thoroughly addressed- not political solution?

Worse still, what is this funny conscription- the Petroleum Products Pricing Regulation Agency (PPPRA), still doing as a government agency when every day we hear that this government had discontinued the subsidy scheme? So which price differentials have they been working out and to what end if actually there was any time government stopped subsidy? Recall that this interesting agency-the PPPRA came into existence just to calculate the price differential between the government-regulated prices of fuels products and the landing costs, handling costs and the marketers’ allowed profit margins. So if we have discarded this fraud -invested arithmetic, what is this organisation still doing- introducing confusion in price templating? What is wrong with us as a people?

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Does it not occur to President Buhari and his government that the more they delay in casting out this demon called PPPRA, the more probable it becomes for this same agency to bring down this government like it did before to the Jonathan rule in our recent history? Mark my words and let those who have ears, hear!

If Government is not paying any form of differential in cost of the product, why does it still stick to this funny policy of always pegging open market price of petrol, kerosene and the rest of them? Couldn’t it have been better if the official price of petrol was adjusted upward slightly instead of throwing money into a bottomless pit for these insatiable marketers? Afterall, there are only few locations across the country that the product sells actually at the so called regulated price. And where you even buy at the government price, the volume is usually short of whatever you paid for even in NNPC mega and franchise stations. So who is fooling who?

Even elementary school economics class understands that if supply far exceeds the demand, naturally the price will come down. Simple! Make the fuel available and see if the market forces would not adjust themselves. The idea of paying over N5 differential on a product that is not even available is absolute nonsense.

Why go back to subsidy again? This method can’t work with the corrupt system we already have. The petrol stations are corrupt, the marketers are corrupt, the buyers are corrupt, and everyone involved in this fuel business is corrupt!

And how can PPPRA say that there is no going back on subsidy removal when as we talk now, the landing cost of petrol stands at N91.80k which is above the government-pegged retail price by N5.80?

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Interestingly, despite serial denials of recommencement of the subsidy scheme by the PPPRA, now petrol is to be subsidised by N5.80 for every litre consumed in the country meaning we are still where we were: all motion, no single progress in frontally taking on the problems in the hydra-headed downstream products availability and distribution sub-sector.

For instance, figures from the latest pricing templates of the Petroleum Products Pricing Regulatory Agency released on Saturday 1st April showed that the Federal Government was paying N5.84 as subsidy on every litre of petrol sold at non-NNPC filling stations.
According to PPPRA, the agency of the Federal Government that regulates the prices of white products (petrol and kerosene) across the country, the Expected Open Market Price (EOMP) of petrol for non-NNPC stations as at April 2, 2016, was N92.34 per litre, against an official pump price of N86.5 per litre, leaving an under-recovery or subsidy of N5.84 per litre.

Similarly, the template for NNPC-run stations showed that the government was paying N5.80 per litre as subsidy, as the EOMP for outlets in this category was N91.80 per litre as against an official rate of N86 per litre.

The EOMP is the actual cost of petrol without subsidy and comprises of the landing cost of the product as well as its subtotal margins like transporters’ charge, admin fee, dealers cost, bridging fund, etc.

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In the words of the Acting Executive Secretary, PPPRA, Mrs. Sotonye Iyoyo, as reported,

“The agency is retaining the retail prices of N86.00 for the NNPC and N86.50 for the other marketing companies. The pump price of household kerosene also remains unchanged from what it was in the last quarter.

“Therefore, marketers are advised to ensure that there is no price distortion in their respective retail outlets. PPPRA, however, shall continue to monitor the global oil market performances, and come up, at appropriate time, with reasonable changes consistent with the newly-adopted price modulation principles.”

What kind of confusion is this?

With a nationwide consumption level of at least 45 million litres per day as claimed by the NNPC and the PPPR, the federal government would pay over N8 billion as subsidy in April alone if the template remains unchanged. This is just for petrol alone we have not added the subsidy bill for kerosene (DPK). Haba, why are going back and forth like this?

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