Economic Recession: Reps Demand Cut in Fuel Price Over Prevailing Hardship - EazyFeeds

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Wednesday 30 November 2016

Economic Recession: Reps Demand Cut in Fuel Price Over Prevailing Hardship

The worsening plight of Nigerians un­der the present eco­nomic crisis dominated proceedings in the House of Representatives yesterday.
After heated debates, the lawmakers were convinced that at the root of the pre­vailing hardship was the Ex­ecutive arm of government’s drastic increase in the pump price of petrol from N86.50 to N145 per litre in May this year.
Consequently, the law­makers passed a motion call­ing on President Muham­madu Buhari to reduce the current price of petrol - also known as Premium Motor Spirit (PMS).

By the calculation of the Lower House, if all the hid­den charges are removed, petrol can sell for N70 per litre with the marketers still retaining their profits.
As a first step to bring­ing succour to Nigerians, the House appealed to the Petroleum Products Pric­ing Regulatory Agency (PP­PRA) and the Federal Minis­try of Petroleum Resources to review the price template and slash the pump price immediately.
The House also set up an ad-hoc committee to in­terface with the Ministry to achieve the goal and other related matters and report back within eight weeks for further legislative action.
Among the charges the House wants the PPPRA to scrap is the N0.84 per litre collected by the Nigerian Ports Authority (NPA) and the N4.56 lightering cost paid to foreign ships.
They asked the NPA to dredge all harbours with­in one year to enable ships dock in them so that the charges by foreign ships can be eliminated.
The resolutions of the House followed the adop­tion of a motion on the “Ur­gent Need to Review the Pe­troleum Price Template” sponsored by Hon. Abuba­kar Hassan Fulata (APC, Adamawa).
Fulata told the House that the current template for the price of petrol could be reviewed downwards with­out affecting the profit mar­gin of marketers and trans­porters and also contribute to reducing the current infla­tionary trend in the country.
He explained that the widely circulated rumour of a possible hike of pet­rol came at a time when the country was going through difficult times caused by dwindling revenues, high in­flation rate, unemployment and general fall in the stand­ard of living of many Nige­rians.
Fulata said that the land­ing cost of petrol is N119.74 while the distribution cost and margins of marketers is N18.37.
He said: “The total of both landing and distribu­tion costs is N138.11 while marketers are allowed to sell the product within the range of N140 and N145 per litre. So, 90 percent of the cur­rent price of petrol in Nige­ria is accounted for by the transport-related charges i.e. N124.34 out of N138.11.”
The lawmaker assert­ed that the only reason for­eign vessels charge higher rates for lifting petrol was that national carriers which were supposed to lift 50% of the products do not have the capacity to do so as a result of which the Nigerian Na­tional Petroleum Corpora­tion (NNPC) often resorts to chartering vessels at high­er costs.
He observed that “the provision of N4.56 in the price template for the light­ering services is absolutely unnecessary,” adding that in line with international prac­tice, all ships are supposed to dock at the harbour. But in the case of Nigeria, the wa­ter level in all the harbours is shallow due to siltation and the harbours therefore need urgent dredging.
“The Nigerian Ports Au­thority is paid N0.84 for every litre of petrol but it has failed to dredge the var­ious docking areas, as a re­sult of which ships wait at the high sea and discharge their cargoes in smaller ves­sels, and for this inefficien­cy of the NPA, Nigerians are asked to pay N4.56 for every litre of petrol, which would not have been necessary if all docking areas had been dredged.”
Fulata highlighted the cost derivatives on the tem­plate as: “Cost of Freight- N109.01; Lightering expens­es- N4.56; Nigerian Ports Authority charges- N0.84; NIMASA charges- N0.22; Financing- N2.51, Jetty through put charges- N0.60; Storage charge- N2.00; Re­tailers’ Margin-N6.00; Transport allowance- N3.36; Dealer’s margin - N2.36; Bridging Fund- N6.20 while Marine Transport average is N0.15 totalling N137.81.
“Landing cost of PMS is N119.74 while the distri­bution cost and margin of marketers is N18.37, thus, the total of both the land­ing and distribution costs is N138.11, while marketers are allowed to sell the prod­uct within the range of N140 and N145 per litre.
“Over 90 percent of the current price of PMS in Ni­geria is accounted for by transport-related charges, i.e. N124.34 out of N138.11 viz: Lightering - N4.56, Bridging fund- N6. 20, Marine transport - N0.15, Transport allowance- N3.36, Freight Foreign- N109.01, NIMASA charges- N0.22 and NPA charges- N84,” he said.
The lawmakers added that if the pipelines linking the various depots and refin­eries are fixed and secured, the bridging fund can be re­duced to N2 per litre instead of the current N6.20.
“Also, a realistic template would bring down the price of petrol to N70.04,” he con­cluded.

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