The federal government may increase the price of Premium Motor Spirit (PMS), better known as petrol, to N302 per litre in February 2022 as part of the recommendation of the National Economic Council (NEC) in November 2021.
You would recall that the government is said to have plans to fully deregulate the PMS prices, eliminating monthly subsidy payments with provisions to ensure fair competition in the market.
Petrol price is currently between N162 and N165 per litre in Nigeria.
The committee was established last year by National Executive Committee (NEC) headed by Vice-President Yemi Osinbajo to look into the dwindling revenues of states and the committee is headed by Governor Nasir El-Rufai of Kaduna State.
The National Economic Council had been interfacing with the Nigerian National Petroleum Corporation (NNPC) on the appropriate pricing of PMS in Nigeria and made its recommendations.
The report was presented by Nasir El-Rufai, governor of Kaduna state and head of the committee.
According to the new report, the committee recommended full deregulation of PMS prices by February 2022 — raising the price by about N130/140 per litre.
It also recommended that all retailers should post PMS prices at all times on a designated website and smartphone app — and they are expected to post price changes no earlier than within 15 minutes of the price change.
With the recommendations, the committee added that the federal government would save N250 billion per month on petrol subsidy removal.
The resolution read in part that, “At current rates, the PMS subsidy is reducing transfers into the federation by about NGN 250 billion per month, and could, if PMS subsidies are not eliminated, result in deductions of NGN 3 trillion in 2022,”
“The large-scale time-limited (6-months) cash transfer proposed as a way of transferring the subsidy “directly to the people” would cost N600 billion but would by paving the way for the elimination of PMS subsidies, enable the federation to recover N3 trillion in revenues that would otherwise go to PMS subsidies.”
“If PMS subsidies are eliminated by February 2022, N250 billion in deductions would have been incurred, but the remaining N195 billion in anticipated PMS subsidy deductions could be redirected towards FGN funding of the cash-transfer programme.”
The NEC committee also recommended a market-based pricing mechanism, as another option, that would ensure petrol price ceilings at least once a month.
The committee noted that NNPC has failed to keep its commitment of N120 billion per month for value shortfall at N162 per litre for petrol.
