The pump price of premium motor spirit otherwise known as petrol will rise from 2015 as the Federal Government has proposed a reduction in monies budgeted for subsidy payment in the coming year, according to Daily Trust findings.
The government’s proposal is contained in the revised 2015-2017 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper submitted to the National Assembly by President Jonathan last week.
Earlier in October, the president had forwarded the MTEF document to the legislature pegging the pump price of fuel at N97 per litre with the expected total subsidy payment of N971 billion in 2015, same amount that was expended in 2014. The crude oil benchmark price of $78 per barrel in 2014 was also retained for 2015.
However, the government withdrew the document from the National Assembly and proposed a reduction in the oil benchmark from $78 to $73 as a result of dwindling oil prices in the international market.
The N971.14 billion earlier budgeted for subsidy was reduced to N458.68 billion, representing a cut of N512 billion or about 50 percent reduction.
Based on the revised MTEF projections also, the government is planning a gradual cut in monies subsidizing consumption of fuel in the country to N408.68 in 2016 and N371.18 in 2017.
According to the pricing template of the Petroleum Products Pricing Regulatory Agency (PPPRA), the government currently subsidises a litre of petrol at N44.94. The template puts the expected price of PMS in the open market at N143.06. The government-regulated price is N97.00.
It is difficult to determine exactly how much oil will cost per litre but consumers are likely to pay for the difference.