President Muhammadu Buhari has approved the reduction in the pump price of Premium Motor Spirit (PMS) from N145 per litre to N125.
The reduction was as a result of the slump in the international crude oil price from $60 to $30, causing fear of a possible economic crisis.
The approval followed a presentation by Minister of State for Petroleum Resources, Chief Timipre Sylva to the Federal Executive Council (FEC), yesterday.
The minister briefed the council on the need to reduce the pump price following the global fall in oil price.
The minister said that already he had met with members of the organized labour in the oil and gas sector before proceeding to make the formal announcement for the price adjustment.
He said that the organized labour was happy with the reduction in petroleum pump price.
A statement by the minister read thus: “The drop in crude oil prices has lowered the expected open market price of imported petrol below the official pump price of N145 per liter.
“Therefore, Mr. President has approved that Nigerians should benefit from the reduction in the price of PMS which is a direct effect of the crash in global crude oil prices.
“In view of this situation, based on the price modulation template approved in 2015, the Federal Government is directing the Nigerian National Petroleum Corporation (NNPC), to reduce the ex-coastal and ex-depot prices of PMS to reflect current market realities.
“Also, the PPPRA shall subsequently issue a monthly guide to NNPC and marketers on the appropriate pricing regime.
“The agency is further directed to modulate pricing in accordance with prevailing market dynamics and respond appropriately to any further oil market development.
“It is believed that this measure will have a salutary effect on the economy, provide relief to Nigerians and would provide a framework for a sustainable supply of PMS to our country.
“The Ministry of Petroleum Resources will continue to encourage the use of compressed natural gas to complement PMS utilization as a transport fuel.”
It was reliably gathered that the outbreak of COVID-19, has made the international crude oil price to crash from $60 to $30, causing fear of a possible economic crisis.
He said the new price regime takes effect immediately and that the NNPC and PPPRA will take care of the implementation.
Responding to the president’s directive, the Nigeria National Petroleum Corporation (NNPC), yesterday, announced that it had reviewed its ex-coastal, ex-depot and NNPC retail pump prices.
The Group Managing Director, NNPC, Mele Kyari, confirmed this in a statement he personally signed yesterday evening.
The release made available to newsmen, noted that the development was compliance with the directives of the Minister of State for Petroleum Resources, Chief Timipre Sylva on PMS pricing.
Kyari noted that effective March 19, 2020, NNPC, ex-coastal price for PMS has been reviewed downwards from N117.6/litre to N99.44/litre.
Similarly, ex-depot price is reduced from N133.28/litre to N113.28/litre.
He said these reductions will, therefore, translate to N125/litre retail pump price.
Kyari added that despite “the obvious cost implication of this immediate adjustment to the corporation, NNPC is delighted to effect this massive reduction of N20/litre for the benefit of all Nigerians.
“Accordingly, all NNPC retail stations nationwide have been directed to change the retail pump price to N125/litre”, the statement concluded.
Meanwhile, the Minister of State, Petroleum Resources, according to sources, has scheduled to meet with members of the organized labour in the oil and gas sector before proceeding to make an announcement.
However, the Federal Government has been told to suspend its plans to sell its stakes in Joint Venture oil assets until the situation in the international crude oil market and global economy improves.
Addressing newsmen in Abuja on its forthcoming 2020 Oloibiri Lecture and Energy Forum Series, Chairman of the Society of Petroleum Engineers (SPE), Nigerian Council, Mr. Joe Nwakwue, disclosed that the decision of the government to sell its joint venture stakes was the right one, noting, however, that it should not proceed with the sale until a future date.
According to him, with the current declining price of crude oil in the international market, the government would not get the fair value from the assets if it chooses to proceed with the sale within this period of high volatility in the crude oil market.
In addition, Nwakwue called for clear policy from the Federal Government as it relates to the oil and gas sector, as this is critical to attracting the much-needed investment in the petroleum industry.
For instance, he blamed the divestment of international oil companies from the Nigerian downstream petroleum industry on lack of clarity in policies and on government’s participation in the sector.
According to him, the reason why asset disposal is rampant in the downstream sector was because it is impossible for a private sector player to compete against a state-owned entity.
He, however, noted that the international oil companies’ divestment from the downstream sector was not a signal of loss of confidence in the sector, noting that if the role of the Nigerian National Petroleum Corporation (NNPC) was reduced in the market today, a number of multinationals would return to the sector.
Nwakwue said, “The disposal from the downstream sector is because it is difficult to compete against a state-owned entity. So, why would you create a situation where the NNPC becomes a major supplier of the market and you expect those entities to exist and continue to compete with an NNPC? It does not.
“No sensible investor goes to compete against a state-owned entity, because you will not win. This is because the state-owned entity has all the power and strength of the state behind it. You cannot win. Your best bet is to partner with the entity.”
He further disclosed that the inability of the country to fix its refineries was more as a result of institutional challenges than technical challenges.
He noted that the fact that the country was unable to revamp the refineries after several years of dilapidation was a reflection of the failure of the state to effectively manage its assets.
Nwakwue explained that the refineries can be revamped, adding that the problems of the facilities were not technical but institutional.
He said, “Running refineries is not rocket science. Refineries are run everywhere in the world. I had worked in a company whose refinery built in 1932, was still running till today.
“That we cannot run the refineries here have more to do with institutional challenges than technical challenges. We can see that private refineries are coming and they would be run. It is not that we cannot run refineries, Nigeria can run refineries.