Markets

FG May Further Cut Petrol Price – PPPRA

Published

9 years ago

February 19, 2016

The continued fall in crude oil price may lead to a further cut in the pump price of petrol by the Federal Government any time soon, the outgoing Executive Secretary of the Petroleum Products Pricing Regulatory Agency, Mr. Farouk Ahmed, has said.

The PPPRA is the agency of the Federal Government that regulates and fixes prices for petroleum products in the country.

The agency had late December 2015 stated that the pricing template for petroleum products would be reviewed occasionally to reflect fluctuations in the price of crude oil in the international market.

While handing over to the most senior officer of the PPPRA, Mr. Moses Mbaba, in Abuja on Thursday, Ahmed noted that as of February 3, 2016, about one month after the review of the pricing template of petrol, the country had saved N2.6bn as over-recovery on the product.

He was, however, quick to state that the value was low because some of the over-recoveries were still arriving.

He stated that the decision on the review of the pump price of Premium Motor Spirit, popularly called petrol, would be taken next month by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, after due consultation with stakeholders, and based on the price of crude oil in the international market.

When asked if the price could be reduced in the future considering the fall in crude oil prices, Ahmed said, “Yes, but wait till March and you will see. Because the minister is fair in the decision he will take, and because he will take the decision pragmatically.”

He added that due to the current state of over-recovery, the PPPRA was recovering some money from the Nigerian National Petroleum Corporation and oil marketers.

Ahmed also noted that as of February 16, 2016, the country recorded over-recovery of N13.81 per litre of petrol, stating that this meant that the landing cost of PMS was lower than the selling price by N13.81.

However, as of the close of business on Thursday, the over-recovery had dropped to N11.74 per litre.

Ahmed explained that on instances of over-recovery, the PPPRA usually sends notes to affected marketers to refund the excess money to the government, adding that the fund was being kept in an account that was recently opened at the Central Bank of Nigeria.

He said, “There has been an account launched at the CBN and being managed by the Accountant-General of the Federation where the over-recovery funds are deposited. So, there is no question of where the money goes to.

“As of February 3, 2016, the estimate in that account, because we are verifying based on what was imported, is just a small amount of about N2.6bn. But this is just the beginning, because some of them were just arriving in December; that is why the subsidy over-recovery is low.

“The fact is that whatever money that will be put into that account, one day, which is our hope that the price of crude oil will go up, there will be more revenue inflow to the Federation Account. The oil sector will benefit. That excess, before you go to the government for any intervention, you go to that account and pull some money and compensate.”

He, however, noted that the over-recovery might disappear if the price of crude oil rises by next month.

Ahmed stated that the process of the review of the pricing template would likely commence by March 15, 2016, and the committee to undertake the review would consist of all the stakeholders in the petroleum industry, including major and independent oil marketers as well as depot owners.

The outgoing PPPRA boss stated, “The recent price modulation mechanism and review of the agency’s pricing template, which took effect from January 1, 2016, has ushered in the much-needed efficiency and cost-saving as far as subsidy payment exposure is concerned.

“This has partly led us to a regime of over-recovery, enabling the government to collect money back from the marketers into the designated over-recovery account at the CBN.”

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Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Energy

Dangote’s Allegation of Refinery Boycott By Marketers False, Says IPMAN President

Published

13 mins ago

October 30, 2024

Ugwoke Ogbodo

The President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Abubakar Garima, has expressed shock over business mogul, Aliko Dangote’s allegation that marketers were boycotting his refinery.

Dangote, the owner of a $20bn refinery had claimed that oil marketers in Nigeria have been avoiding his refinery for imported petrol.

He had lamented that such a move would impact negatively on the country’s economy and would discourage local investment.

Responding, however, IPMAN President said the allegations were false.

According to Garima, while speaking on a live telephone programme monitored by Investors King on Wednesday, IPMAN members are not importing petrol.

On the contrary, he disclosed that oil members can’t load petrol from the Dangote Refinery in Lagos despite having paid ₦40billion to the Nigerian National Petroleum Company Limited (NNPCL).

He said rather than get Dangote petrol through the NNPCL, the private refinery should register independent petrol marketers directly for smooth loading of the product.

The IPMAN boss noted that if Dangote could be able to sell the product to oil marketers directly, they can buy the product.

He expressed frustration in the fact that marketers had to pay before they pick, adding that “Presently, we have ₦40bn under the NNPCL custody but we cannot source the product.”

Garima explained how some marketers that NNPCL sent to load in Dangote refinery stayed with their trucks for four days, and they cannot load.

Energy

Ghana to Source Fuel from Dangote Refinery in 2025

Published

7 hours ago

October 30, 2024

Yetunde Olugbenga

As part of efforts to reduce the cost of Premium Motor Spirit (PMS), commonly known as petrol, Nigeria’s neighbouring country Ghana has expressed readiness to start buying from Dangote Refinery in the first quarter of 2025.

Chairman of the National Petroleum Authority Ghana, Mustapha Abdul-Hamid announced this at the Oil Trading and Logistics (OTL) Africa Downstream Oil Conference held in Lagos, Nigeria.

Abdul-Hamid categorically said that Ghana will purchase fuel from Nigeria once the Dangote refinery begins operation fully.

According to him, the projected 650,000bpd daily production is too much for Nigerians to consume. Hence, Ghana could benefit from the surplus production, allowing both countries to collaborate more closely in the energy sector.

Currently, importing petrol from Rotterdam has made fuel prices relatively high in Ghana due to unfavorable exchange rates.

“If the refinery reaches its 650,000 bpd capacity, all that volume cannot be consumed by Nigeria alone, so instead of us importing as we currently do from Rotterdam, it will be much easier for us to import from Nigeria, which I believe will help bring down our prices,” Abdul-Hamid stated.

By sourcing petrol from Nigeria, Ghana hopes to mitigate logistic costs and benefit from a more favourable pricing structure.

Ghana buys $400 million worth of petrol from Europe monthly, which over the years has impacted the commodity pricing in the West African country.

Abdul-Hamid further said the volatility of the Ghanaian cedi against foreign currencies led to increased costs for fuel.

Additionally, buying from a neighboring country would reduce the exchange rate impact on petrol prices, significantly lower fuel costs, and reduce the prices of other goods.

“The reduction in freight expenses would help bring down the prices of various goods, positively impacting Ghana’s broader economy,” he concluded.

Crude Oil

Crude Oil Prices Dip Further as Israel Plans End to Lebanon Conflict

Published

8 hours ago

October 30, 2024

Iyanuoluwa Martins

Oil prices extended losses on Tuesday after Israel signalled a diplomatic solution to the war in Lebanon, adding to a more than 6 per cent drop in the previous session on Monday after Israel carried out its retaliatory strike on Iran at the weekend

Brent crude futures settled down 30 cents, or 0.4 per cent at $71.12 a barrel while the US West Texas Intermediate (WTI) crude shed 17 cents, or 0.3 per cent to $67.21 a barrel.

Israel’s Prime Minister, Mr Benjamin Netanyahu will hold a meeting on Tuesday evening with ministers and the heads of the country’s military and intelligence community about talks for a diplomatic solution to the war in Lebanon.

Recall that Israel is currently embroiled in fighting with two separate groups, Hamas and Hezbollah backed by Iran in the Middle East.

Meanwhile, Iran said it will use all available tools to respond to Israel’s weekend attack. If this happens, it could create a fresh wave of tensions.

Also pressuring prices is the declining oil demand from China, the world’s largest crude oil importer, which continues to impact global oil consumption and prices.

Market analysts note that demand will return to normal growth rates after Chinese President Xi Jinping introduces new stimulus measures to the economy.

According to the American Petroleum Institute (API), crude oil inventories in the US fell by 573,000 barrels for the week ending October 25. The API reported a 1.643-million-barrel build in crude inventories for the week prior.

So far this year, crude oil inventories in the world’s largest oil producer have slumped by just over 6 million barrels since the beginning of the year, according to API data.

Official US government data from the Energy Information Administration (EIA) is expected later on Wednesday.

The US Federal Reserve will cut interest rates by 25 basis points on November 7. Lower interest rates cut the cost of borrowing, which can buoy economic activity and boost oil demand.