The Petroleum Products Pricing and Regulatory Agency (PPPRA) is in dilemma. Recent developments in the international oil market have made it increasingly difficult for the agency to disguise its fraudulent administration of petroleum products subsidy.
PPPRA is known more for scamming than transparency and accountability. It was neck-deep in the 2011 fuel subsidy scam in which government agencies doled out N2.3 trillion to fraudulent fuel marketers. No one could account for the mysterious products. And no one has been sent to jail for the heinous crime against the Nigerian people.
Despite its horrific record of collaborating with high net worth criminals to loot public funds, PPPRA managed to explain to Nigerians the dubious process of subsidy administration. Its website showed a template with a breakdown of petrol price structure ranging from the inflated landing cost to storage, haulage costs and marketers margin. That template showed on weekly basis the subsidy on a litre of petrol. All that ended on December 29, 2014. PPPRA has not updated the price template since then.
With its current stance on the issue, the actual cost of petrol became any one’s conjecture. The rumour mill took over from PPPRA and fed consumers with all sort of information on the landing cost of petrol. Sometime last week, it was strongly speculated that the Nigerian National Petroleum Corporation (NNPC) was gaining N19 for every litre of petrol it sold to marketers. That probably explains the thick veil of secrecy that enveloped the pricing of petrol in PPPRA’s website.
Finance minister, Mrs. Ngozi Okonjo-Iweala had suggested in December 17, 2014 during her presentation of the 2015 Appropriation Bill to the National Assembly that the federal government would only consider a downward review of the price of petrol when the price of crude oil hits the “break-even” point of $60 per barrel. As the minister was addressing the National Assembly on an Appropriation Bill with an oil reference price of $65 per barrel, oil price slipped below $60, the so-called “break-even” price which she hinted as the point at which downward review of petrol price could be considered.
By the time the minister left the hallow chambers, it was clear to everyone watching the oil industry that government was already making profit from selling petrol at the official pump price of N97 per litre. PPPRA’s graveyard silence on the landing, storage, haulage costs, retailers’ margin and other components of the pricing of petrol was a clear signal that we have reached a point where motorists and millions of Nigerian households toiling to fuel their power generating sets with over-priced petroleum products should be allowed to reap the benefits of tumbling crude oil prices in the form of lower pump price of petroleum products.
It was therefore not surprising when the minister of petroleum resources, Mrs. Diezani Alison-Madueke announced on Sunday that the pump price of petrol has been reduced from N97 to N87. Feelers from the international oil market suggest that the new official price of petrol still borders on profiteering. Market watchers contend that the pump price of petrol should not be more than N80 per litre under present circumstances.
However, at a time when the federal government is facing a deficit of N1.9 trillion on a budget proposal of N4.3 trillion, no one expects the men in Aso Rock to give consumers all the benefits of tumbling crude oil prices.
Okonjo-Iweala hinted last week that the federal government was poised to roll out more austerity measures. Keeping petrol price at profiteering level could be one of the austerity measures.
Meanwhile, if an update of the PPPRA petrol price template is considered politically inexpedient, the agency could do petroleum product consumers a favour by publishing the price template of diesel and aviation fuel. Consumers of diesel and the nation’s cash-strapped airlines have in the last 10 years been fleeced by heartless, profiteering marketers. They should be allowed to enjoy lower pump prices for the first time in a decade. Diesel and aviation fuel sell at N150 to N160 per litre. At the current price of crude oil, their pump price should be N95.
Nigeria probably flaunts the highest pump price of the two products. Ironically, Alison-Madueke was curiously silent on what would happen to the mindless profiteering on the pump prices of diesel and aviation fuel. Marketers are raking in a minimum of N70 from every litre of diesel and aviation fuel.
PPPRA has successfully held down the pump price of petrol in some parts of the country by dubiously paying out trillions of naira to fraudulent marketers. It has never pretended to enforce the government-imposed price of kerosene at N50 per litre. Marketers have defiantly kept the pump price of kerosene at N130 per litre despite billions of naira paid to them as subsidy.
PPPRA has failed Nigerians. No one expects a leopard to change its spots at old age. However, it could still spring a pleasant surprise by publishing the price structure of diesel and aviation fuel on its website. That would expose the level of profiteering by marketers and kick up an informed debate that could halt the fleecing of consumers by cronies of the ruling class.