The Federal Ministry of Petroleum Resources has prepared a
factsheet that tries to answer all our questions on the new price
of petrol in Nigeria: Top 13 Frequently Asked Questions (FAQs):
1.What is the benefit of the new price regime to Nigerians?
This government is elected to serve the people and provide
benefits to all. The new pricing regime brings the following
Solves the recurrent fuel scarcity crisis by ensuring
availability of products at all locations of the country
Reduce hoarding, smuggling and diversion substantially and
stabilise price at the actual product price
Ensures market stability and Improves fuel supply situation through
private sector participation
Creates Labour market stability (will potentially create additional
200,000 jobs through new investments in Refineries and Retails and
prevent potential loss of nearly 400,000 jobs in existing
2. Why the new price regime?
This has been brought about by the non-availability of foreign
exchange to import petroleum products. Marketers have drastically
reduced their importation since Q3 2015 due to a scarcity of forex.
There is a need for them to source independent of CBN to be able to
meet the nationâ€™s demand. Also the rise in Crude
oil price and prevailing high cost of importation has brought back
subsidy regime (at the present price of N86.50) since April 2016.
Due to decline in government income related to crude oil price and
limited crude oil output caused by the spate of renewed vandalism
and sabotage of oil infrastructure in the Niger Delta, there is
neither funding nor appropriation to cover this in the 2016
3. What is the difference between this new price regime and
previous price reviews?
Before arriving at the new price regime, a comprehensive study
of the costs of importation was undertaken. All stakeholders
including marketing companies and independent experts were
consulted in arriving at the appropriate cost reflective regime.
This is in furtherance of the Price modulation framework rolled out
in January 2016 which entails modulating prices down or up on a
periodic basis to reflect actual prevailing costs.
4. Is this new price regime a deregulation?
While the Federal Government is not deregulating, the
Government through this new price regime will ensure that the price
of products are monitored and modulated to ensure that citizens get
a fair value for products they purchase.
5. What is the real cost of PMS to the Nigerian
The estimated â€œtrueâ€ cost of
PMS was valued to be 243.05NGN per litre. This is factoring the
estimated average time spent to obtain PMS at the official price
(86.50NGN), the estimated hourly wage of the average Nigerian, the
average price of PMS on the black market and the estimated average
volume bought per visit to the filling stations and also factoring
in the frequency Nigerians source PMS from the different
6. Why do we have scarcity?
Unavailability of Foreign exchange and Inability to open
letter of credit has forced marketers to stop product importation
and this imposed over 90% supply on NNPC since October 2015 in
contrast to the past where NNPC supplies ~48% of the national
NNPC does not have the resources for and is not designed to meet
this increase in supply, this has resulted in the current fuel
situation across the country.
7. Will the new price regime ensure availability of petroleum
The new price regime will allow Marketers source their foreign
exchange independently of CBN and ensure adequate product supply in
all locations of the country whilst catering for full cost recovery
and averaging of prices across the nation
8. Will the new price regime positively impact the
Clearly the continuation of subsidies in any form for PMS
limits the ability of Government to deliver its statutory functions
such as power generation, security, education, health etc. The new
price regime will enable government focus on these critical sectors
and free up our scarce foreign exchange via CBN to be used in other
9. What happens to the subsidy provision in the 2016
There is no provision for subsidy in the 2016 budget
10. Why should Nigerians not enjoy low petroleum prices as the
nation is a Major Oil Producer?
Crude oil price is an internationally traded commodity , the
prices are not set by the countries that produce it. Neither do oil
producing countries get a discount in the international market for
producing this product. Furthermore, crude oil price accounts for
about 80% of the final cost of fuel. Other costs include depot
charges, transportation costs, chemicals, spare parts, raw
materials etc. is related to host of economic factors. . Therefore,
at the current crude oil price of $40 per barrel, the finished
domestic refined fuel sold to Nigerians cannot be priced lower than
the cost of the crude plus the other associated costs incurred in
converting the crude into PMS and supplying the product to the
11.How would the Government ensure that Petroleum Marketers
sell within the price range?
The relevant regulatory institutions (DPR, PPPRA) will be
further empowered to ensure level playing ground, strict compliance
with market rules by all stakeholders and consumer
12. How does petrol price in Nigeria compare with those of
Even with the new price regime, Nigeria would remain one of
the cheapest fuel markets in Africa and this could even be lower
once competition takes effect. Likelihood of smuggling to
Neighboring countries will also be significantly reduced with the
new price regime.
13. When do we stop petroleum products importation?
Nigeria will only stop products importation when it attains
local production sufficiency. The present administration is working
assiduously on key initiatives towards boosting our local refining
capacity. The overarching objective is to create a competitive
downstream petroleum market in Nigeria and be a net exporter of
petroleum products by 2019.