”When crude oil was selling at 100 dollars per barrel, the landing cost of PMS without subsidy was 125 Naira per litre. Now that the oil price has crash to about 44 dollars per barrel, landing cost without subsidy is about 65 Naira per litre. The same goes for diesel which should not sell for more than 90 Naira per litre,” it said.
APC said while governments of countries which are not as economically endowed as Nigeria have reduced the pump price of fuel as far back as early January 2015, Nigeria that is the world’s sixth largest producer of oil is just announcing a price slash that is far below those countries.
”Early this year, Zambia slashed the price of petrol by 23 per cent while Tanzania reduced the pump price of the product by 16%. In the US, which until recently was importing crude oil from Nigeria, the price of fuel has fallen for 113 consecutive days
as of Jan. 16. Therefore, the 10.3% price slash in Nigeria is too meagre too late,” the party said.
It said the real reasons that the Nigerian government has delayed slashing the price of imported petroleum products following the crash in crude oil prices are the massive corruption in the oil sector and lack of political will on the part of the country’s leadership.
”With Nigeria depending on importation of petroleum products to meet about 90% of its domestic consumption, the country is relying heavily on term contracts entered into with petroleum product trading companies to meet its domestic demand. It is possible that the petroleum products pricing formulas embedded in these contracts, which generally run for up to 1-1/2 and in some cases 2 years, have not anticipated these low prices.
”Therefore, unless the government moves to renegotiate the contracts now, it may not reap the full benefits of the decline in
petroleum prices. But here is the catch: Since the government and its agents have skimmed off huge ‘commissions’ from the firms with which the term contracts were signed, it could not possibly go back and renegotiate those contracts or go into new forward contracts that will reflect the current reduction in crude oil prices.
”It takes a strong willed, determined and transparent leadership to immediately call in the petroleum products contracts for re-negotiation, as this will represent a huge blow on corruption in the sector since clearly ‘commissions’ would have been paid by petroleum product traders on the existing contracts. This explains the token reduction in fuel price, which the government must have hoped will fool an unsuspecting public, especially a few weeks to elections,” APC said.
The party also wondered why the PDP-led federal government had to wait for a widely-publicized call from the APC Presidential Candidate, Gen. Muhammadu Buhari, and some other concerned Nigerians before doing what the government of other countries in Africa and elsewhere around the world have already done: slash the price of petroleum products commensurate with the fall in crude oil prices.
