Petrol price falls to N65

Posted by From Yusuf Alli and John Ofikhenua, Abuja on 2009/01/23 | Views: |

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Petrol price falls to N65

The pump price of petrol fell yesterday from N70 to N65 per litre, ending the tradition of "aribitrary" fuel price hike and ushering in a regime of deregulation – quietly.

The pump price of petrol fell yesterday from N70 to N65 per litre, ending the tradition of "aribitrary" fuel price hike and ushering in a regime of deregulation – quietly.

The reduction, which is seven per cent of the old price, will subsist till the end of this month.

The cut, the first to be forced by market forces, was informed by the fall in the prices of crude and refined petroleum products at the international market.

A statement in Abuja by the Petroleum Products Pricing Regulatory Agency (PPPGA) said the development in the international market had affected the local pump price of petrol.

"This development has brought the open market pump price of Premium Motor Spirit (PMS) below the current price of N70," the statement signed by PPPRA’s spokesman Yusuf Mu’azu said.

The reduction, the statement added, "is in line with PPPRA’s statutory mandate".

The statement reads: "The PPPRA decided to substitute the fixed price with a recommended price in order to pass on the benefit of this drop in price to the Nigerian public.

"All petroleum marketers are enjoined to comply with this price immediately. The PPPRA, using its automatic price adjustment mechanism, shall be posting on its website as well as announcing and publishing in the media the indicative price of petrol on monthly basis.

"The PPPRA will continue to liaise with the Department of Petroleum Resources (DPR) to ensure that petroleum marketers do not engage in profiteering by selling above the upper limit of the open market price monitored by the Agency.

"In this regard, it is recommended that all petroleum marketers take a cue on the open market reference price level for petrol – the average for the one-month period specified - from the PPPRA’s posted price on its website or as published in the national dailies.

"Based on current market fundamentals, the indicative open market pump price of petrol for the month of January is N65.00k."

The reduction is a departure from the tradition of increasing fuel price, at will, by the government.

Until yesterday’s development, it was generally believed that petrol price would never come down, even with the deregulation of the petroleum sector.

The policy was introduced in 2002 by the former Obasanjo administration with the intention of allowing market forces to determine the prices of petroleum products.

Despite the policy, the government had always determined products’ prices, setting it on collision course with the people.

During Obasanjo’s administration, there were about three strikes over fuel price hike.

There had been speculations about the reduction following the falling price of crude. But the government denied any such plans.

When President Umaru Yar’Adua assumed office on May 29, 2007, petrol price was N75 per litre. The price was raised from N65 to N75 by former President Olusegun Obasanjo on the eve of his exit. Workers went on strike over the increase. Following Yar’Adua’s intervention, the price was reduced to N70 and workers called off the strike.

It was gathered last night that the price may vary monthly. It could go up from N65 and be reduced further based on market fundamentals.

A highly placed source, who spoke in confidence with The Nation, said: "After several hours of meeting with stakeholders, we all agreed that market fundamentals will henceforth determine prices of products.

"The reduction in the pump price from N70 to N65 was purely a decision of the PPPRA, which exercised its powers as contained in its enabling Act.

"It means that on monthly basis, the PPPRA will be giving indicative prices of what the pump rate of fuel should be.

"By implication, the pump price may go up or be reduced on monthly basis, depending on market fundamentals.

"These market fundamentals include crude price, cost of refined product, cost of finance, exchange rate and cost of freight, among others."

"So, this N65 is not a fixed rate, the pump price will now<

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