Oil price fall:Nigerians to pay more for petrol in 2015

The pump price of premium motor spirit otherwise known as petrol will rise from 2015 as the Federal Government has proposed a reduction in monies budgeted for subsidy payment in the coming year, according to Daily Trust findings.The government’s proposal is contained in the revised 2015-2017 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper […]

The pump price of premium motor spirit otherwise known as petrol will rise from 2015 as the Federal Government has proposed a reduction in monies budgeted for subsidy payment in the coming year, according to Daily Trust findings.
The government’s proposal is contained in the revised 2015-2017 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper submitted to the National Assembly by President Jonathan last week.
Earlier in October, the president had forwarded the MTEF document to the legislature pegging the pump price of fuel at N97 per litre with the expected total subsidy payment of N971 billion in 2015, same amount that was expended in 2014. The crude oil benchmark price of $78 per barrel in 2014 was also retained for 2015.
However, the government withdrew the document from the National Assembly and proposed a reduction in the oil benchmark from $78 to $73 as a result of dwindling oil prices in the international market.
The N971.14 billion earlier budgeted for subsidy was reduced to N458.68 billion, representing a cut of N512 billion or about 50 percent reduction.
Based on the revised MTEF projections also, the government is planning a gradual cut in monies subsidizing consumption of fuel in the country to N408.68 in 2016 and N371.18 in 2017.
According to the pricing template of the Petroleum Products Pricing Regulatory Agency (PPPRA), the government currently subsidises a litre of petrol at N44.94. The template puts the expected price of PMS in the open market at N143.06. The government-regulated price is N97.00.
It is difficult to determine exactly how much oil will cost per litre but consumers are likely to pay for the difference.
We’ll resist any price hike – NLC
When contacted last night, General Secretary of the NLC Comrade Peter Ozo-Eson said he was out of the country but could reply to a text message.
Comrade Ozo-Eson said in a reply to a question “with the current international price of crude, there is very little subsidy if any. What must not happen is an increase in pump price when crude prices are nose-diving.
“We stand ready to resist any increase. But like I said, given the present price of crude, there can hardly be subsidy. If anything, we expect a reduction in pump price, going forward.”
Nigeria tried to end subsidy in 2012 in efforts to cut government spending and encourage badly needed investment in local refining, doubling the price of a litre of petrol overnight to about 150 naira per litre from about 65 naira, Reuters reported.
The move angered citizens, who see cheap petrol prices as the only benefit they derive from living in an oil-rich country, and this led to eight days of nationwide strikes. Other analysts said the subsidy scheme is a sham insisting that no money is being paid by government. The government later reinstated part of the subsidy to end the strikes.
The budget proposals assumed an exchange rate of 162 naira to the U.S. dollar for 2015, weaker than 160 naira assumed for 2014. It expects the naira to weaken further to 163.50 in 2016, reaching 165 in 2017 but already Naira is exchanging at as much as N180 per dollar in the black market.
The naira has come under pressure in the past two months, losing almost 20 percent this year, from falling oil prices, which have weakened appetites for assets in Africa’s biggest economy and chief oil exporter.
The currency shed 0.76 percent last Friday to close at a record low of 177.45 naira against the greenback, despite the central bank’s intervening for a fifth day with dollar sales to prop it up, dealers said.