The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu says the Federal Government would focus on price modulation of petroleum products to ensure efficiency and provision of the products.
He gave the indication while addressing newsmen on Thursday in Abuja.
According to Kachikwu, price modulation had nothing to do with the removal or existence of subsidy even as he insisted that the amount spent on subsidy claims by the federal government cannot be sustained.
“There is too much emotion around subsidy issue, but our focus is that the Federal Government should not spend as much as it spends every year on subsidy.
“First, it is an issue of irresponsibility; this year we have spent about one trillion and given the state of the finances, we have to save money from every means.
“What I am trying to do is to make sure that whatever we do, the poor people will not be affected. So whatever we are going to do will be intellectual”, he said.
On the way forward, the Minister said that the NNPC would review the template of the Petroleum Products Pricing Regulatory Agency (PPPRA) and achieve reduction in the cost for clearing the product.
According to him, foreign exchange provisions will be looked into, to ensure stability in the system.
He added that efforts were being made to ensure more allocation to the oil industry to ensure certainty in the system.
He said that Nigeria consumed below 40 million litres of Premium Motor Spirit (PMS) per day, adding that a reduction in smuggled products would put the level of consumption between 35 and 36 million per day.
“If we take this analysis, we can deliver products today with the price of oil where it is and also sell close to the prices we have today.
“It is not that we have removed subsidy but the application of market forces will enable you to sell products as close to the prices we have today.
“Is it going to be between N87 and N90; we will have to get PPPRA to do those templates and at 35 million (litres) we may sell products at N87; by the time we consume 36, we may be selling at N90 or N91”, he said.
He said a band had been approved between N87 and N97 to look at price modulation, adding that it would look at price at every given time of crude.
The minister said that the price would no longer be fixed, noting that the price of crude would continue to determine what the price of product would be.
Kachikwu said that the report that pump price would go back to N97 in 2016 was not true, adding that a band of N87 and N97might be adopted.
“Today the prices are largely close to N87; there might be no need to change the price by January, and it might go up or come down slightly by April.
“It is all the dynamics of what the crude is; so, I have not put a static figure, myself and PPPRA will sit down and do the calculations and be able to announce what price PMS will sell in January”, he said .
The Minister added that there was no anticipation of any major shift in regards to the price of crude.