A committee set up by the Nigerian Governors Forum (NGF) has recommended N408.5 as the new pump price for Premium Motor Spirit (PMS), otherwise known as Petrol.
The committee, chaired by the Kaduna State Governor, Nasir el-Rufai, however said that with concessions to organised labour, the minimum pump price for petrol should be N380 per litre.
el-Rufai, while presenting the recommendations of the committee during a virtual meeting of the NGF on Wednesday, explained that the current subsidy regime was unsustainable because smugglers and illegal markets in neigbouring African countries were the beneficiaries.
The committee recommended that the removal of subsidies should be immediate to save the nation’s economy.
According to him, Nigeria, like other Organisation of the Petroleum Exporting Countries (OPEC) member countries, agreed to a cut production to keep the prices high but that Nigeria could not fully benefit from the regime because of subsidies.
el-Rufai said: “Between N70bn and N210bn is estimated to be spent every month to keep gasoline price at N162 per litre, this is below the cost price and the remittance to the federation account will shrink to less than N50bn per month or even zero if threats persist.
“We are already at zero. I understand for tomorrow, so this scenario has occurred.
“Why are we keeping the price at N162? We are keeping the price because the Federal Government and trade unions met and agreed to the suspension of some industrial action months back.
“Even though we all supported deregulation of petroleum products prices last year, this agreement was suspended by the Federal Government because of a threat of industrial action by unions. This is the root of the problem and now we are back to losing between N70bn to N210bn per month.”
The Kaduna State Governor further explained that in the 2021 budget the Nigerian National Petroleum Corporation had committed to remitting a minimum of N120bn per month to the federation account, but it had been unable to do so.
Thr governor further explained that only about 12 states consumed two-thirds of the petrol, which was heavily subsidised.
The committee therefore recommended N408.5 litre as the appropriate price in the circumstance but that with concessions to labour unions, N380 per litre could be the minimum.
“The committee recommends PMS pump price increment from the current N162 per litre to N408.5 per litre (negotiations with organized labour unions). N380per litre (settlement with organized labour).”
This, he said, was necessary to free funds for critical projects and payment of other obligations.