The increment in the price of crude oil at the international market has pushed the price of Premium Motor Spirit (PMS) landing cost to N160 per litre.
It was learnt Friday in Abuja that the while the landing cost was N160 as at yesterday (Thursday) morning, the open market price has also jumped to N183 per litre.
The open market price is the expected price at the pump stations. The additional N23 is the Petroleum Products Pricing Regulatory Agency (PPPRA) pricing template component.
With payment of additional N23 as contained in the PPPRA pricing template and national consumption figure of about 50 million litres daily, the Federal Government now offsets about N1.1 billion on consumption of petrol in the country daily if the situation remains the same going forward.
Meanwhile, a source in the petroleum industry has called for the establishment of a special account in the Central Bank of Nigeria (CBN) for the importation of petroleum products.
He argued that such a special fund would make foreign exchange readily available to marketers that want to import the product as a smart move of breaking the state monopoly the Nigerian National Petroleum Corporation (NNPC) has assumed.
He said: “The creation of this special fund will ensure that the NNPC is no longer bogged down by importation of petroleum products which is not its core business. There are very serious businesses that the corporation should be engaging in that can benefit Nigeria as a country more than importing products, which the private sector is most suited to do. NNPC engaging in petrol importation is not without some underhand practices that are draining the country.
“The time has come for the NNPC itself to push for its exit from importation of petroleum importation business to boost efficiency in its core business areas. The creation of a special fund will encourage more marketers to come into the fray and that is most likely to lead to reduction in the pump price.”
Indeed, from August 2020, there was a Federal Gazette that forbade the PPPRA from interfering in the prices of petroleum products. However, the gazette stated the role of the PPPRA to include intervention where the agency finds the prices too high and unjustifiable.
This scenario presents where all operators including marketers are able to defend their prices in clear manner to avoid sanctions by the PPPRA.
PPPRA’s PMS pricing is made up of two parts. The first part is the product/importation cost (cost, insurance and freight) and the second aspect is the local distribution margins (cost of distribution and return on investment).
Product cost is the cost of one metric tonne of petroleum product in US Dollars as quoted on Platts (S&P Global Platts). Freight is the average cost of transporting (30kt) cargo from North West Europe (NWE) to West Africa (WAF).
Lightering is the ship-to-ship local freight charge incurred on the trans-shipment of imported petroleum products from the mother vessel into daughter vessel to allow for the onward movement of the vessel into the jetty.
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