Why petrol may be reduced to N85 per litre from January 1, 2016

The Federal Government would reduce the pump price of the Premium Motor Spirit (PMS) to N85 per litre from January 2016.

Minister of State for Petroleum, Dr. Emmanuel Ibe Kachikwu revealed this to journalists on Friday, December 25, while inspecting the Port Hacourt Refinery Company (PHRC).

Kachikwu NNPC) said: “We have done a modulation calculation and it is showing us below N87. I imagine that if PPPRA publishes it today, it will become effective immediately. But the 1st of January that is when we are looking at.”

The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) said the price reduction would now convince Nigerians that the pricing modulation that the Federal Government promised to embark on a few days ago was not a ‘gimmick’.

Kachikwu said that as a result of government’s analysis and research, it was discovered that the country can fluctuate the fuel market in accordance with the crude oil market fundamentals.

“It is out I signed off on it yesterday (Thursday). I imagined that in the next couple of days the marketers would get advice on that. The nice thing about the PPPRA, where I signed up on it yesterday is that the price will be far below N87.”

“So for the first time people will understand that the pricing modulation I was talking about is not a gimmick. It is for real. We have gone to find out how we will be able fluctuate this market to reflect what the reality of crude market is. The objective is that one, we cannot afford to continue to subsidize.”

“We can’t even understand where those subsidies were going to. There is a lot of fraud elements in it so we need to cut that of. The second is the earning capacity of the Federal Government is deteriorating by the day with lower prices of crude and come out more.”

The Minister added that government has discovered that petrol would sell for either N85 or N86 per litre, based on the application market realities for the pricing modulation.

“But in applying that where we landed when we did the analysis for the very first time was about N85 or N86 so it is below N87.”

“And maybe the first price that will come will reflect it. That was why Mr. President said that prices will be N87 for now. And that is what we have in mind.”

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