Saturday, January 24, 2015

Alison Madueke: FG Will Pay Fuel Subsidy For 40 Days

Despite the recent reduction in the
pump price of petrol from N97 to
N87 per litre, the Federal
Government has said it will still pay
subsidy on the product for the next
40 days.

The government explained that fuel
consumed in Nigeria was "heavily
subsidised" before the global crunch
in crude oil prices, adding that it
would take some time before
subsidy on the product would stop.
The Minister of Petroleum
Resources, Mrs. Diezani Alison-
Madueke, while explaining why the
pump price of fuel in Nigeria did not
reduce as soon as global crude oil
prices plummeted, said Nigeria was
importing against the global import
prices for crude.
She spoke during a Raypower radio
programme monitored by our
correspondent in Abuja.
Speaking also on the price of diesel,
the minister said the product's price
was been decided by market forces
as diesel was not regulated by the
Federal Government.
"Bear in mind that we will still be
covering subsidy cost for at least 40
days for those marketers who had
already brought in stock, there
should be no issue with distributing
the product at the lower price," the
minister said.
The PUNCH reported on Thursday
that despite the recent reduction in
the pump price of petrol, the
government claimed it still pays
N2.84 as subsidy on every litre of
the product consumed.
Also, the Petroleum Product Pricing
Regulatory Agency, in a statement
on Friday, insisted that with the
current pump price of N87/litre, the
government was still subsidising the
pump price of petrol in favour of
The PPPRA Executive Secretary, Mr.
Farouk Ahmed, said the price of
crude oil dropped to a point where
the open market price of petrol also
fell to a level where the government
considered it appropriate to relieve
some of the burden imposed on
Nigerians by the knock-on effect of
the dwindling price of crude oil on
the economy.
He said the price of crude oil
averaged $62 in December, 2014
and dropped to an average of $50
per barrel for the first half of
January, 2015.
According to Ahmed, it is after a
consistent monitoring of the trend
that the government was able to
confirm its ability to reduce the
pump price of gasoline,
commensurate with the amount
He explained that even at the
lowest crude oil price of $47.23
recorded on January 16, 2015, the
open market price of petrol was
about the same as the erstwhile
price of N97/litre.
"What this means is that at the new
price of N87 per litre, government is
still subsidising the pump price of
petrol," Ahmed was quoted in the
On why the price of diesel did not
respond to the global crash in crude
oil prices considering the fact that
the product was not subsidised,
Alison-Madueke said diesel was not
controlled by the government.
She said, "Therefore you will find
that diesel's response is directly
related to the market indices of
supply and demand in a free market.
It relates directly to whatever cost it
is being procured abroad, that is the
global prices. So we have no
business with that."
On kerosene and why it was difficult
to get the product at the subsidised
rate of N50/litre, she said the
transportation cost to remote areas
coupled with the greed of some
marketers were the major reasons
why kerosene price was high in
many locations.
Alison-Madueke said, "There are
unscrupulous marketers everywhere
who just put more on top of their
products than the actual
transportation cost. We have come
down hard on them so many times
and have sealed some of them. But
as you do one, another one comes
behind and that is why I appeal to
marketers because it is greed and
avaricious behaviour that causes
Meanwhile, the government officially
commenced its Kero-Correct Scheme
on Friday in Abuja. The scheme,
according to the Group Managing
Director, Nigerian National
Petroleum Corporation, Dr. Joseph
Dawha, would ensure the sale of
kerosene at the regulated price of
N50/litre in filling stations across the
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