The Minister of State for Petroleum Resources and Group Managing Director of the Nigerian National Petroleum Corporation, Dr. Ibe Kachikwu on Thursday dispelled insinuations in some quarters that the Federal Government has concluded plans to increase the pump price of fuel from N87 to N97 per litre as from January 2016.
Speaking during a media parley at the NNPC Towers Abuja, Dr. Kachikwu noted that the discourse has long left the realm of subsidy removal to a more scientific price modulation approach which entails an elastic price mechanism regime to be reviewed periodically to reflect the prevailing international price of crude.
He explained that when operational, the novel price modulation system will place a N97 per litre cap on the price of fuel to ensure that Nigerians are insulated from the vagaries of the global crude price.
“ I did not say that refined petroleum products will sell for N97 per litre next year. I said that between a band of N87 and N97 we are going to be looking at prices and today the prices are largely close to N87. So, there is no need to change the price.’’
The Minister noted that to determine the price of petroleum products in future, the Petroleum Products Pricing Regulatory Authority, PPPRA, will undertake quarterly review of the crude market situation.
Said he: “I have not put a static figure. PPPRA will have to do the calculation to be able to announce what price of PMS will sell for in January; but we do not anticipate any major shift because of the price of crude today.’’
Meanwhile the new wave of openness and transparency pervading the operations of the NNPC since the advent of the new administration was sustained with the announcement of 21 Off-takers as winners of the open bid exercise conducted in October. The exercise witnessed the unprecedented public harvesting of 278 bids submitted by indigenous and foreign firms seeking to secure contract for the sale and purchase of the 26 Nigerian crude oil grades on offer.
A breakdown of the 2015/2016 crude oil term contract off-takers for the 991, 661 bpd Nigerian equity crude indicate that 240, 000 bpd representing 24 percent of the total volume on offer is awarded to four Refiners classified as major current receivers of Nigerian Crude with capacity to process all of Nigerian crude grades. The Off-takers in this category include: Emirates National Oil Coy, ENOC, Indian Oil Corporation, CEPSA Refinery Madrid and Sara SPA Refinery. Each of the Off-takers in this category was awarded 60, 000 bpd.
Three notable International Trading Companies, namely Trafigura PT Ltd, Mercuria Energy Trading SA and Vitol SA won the bid for the lifting of 32, 000 bpd of crude based on their pedigree as large scale buyers of Nigerian Crude with structure for short term freight intervention and storage. The off-takers in this category represent about 10 percent of total crude volume on offer.
Trading Affiliates of International Oil Companies consisting of ENI Trading and Shipping SPA, TOTSA Total Oil Trading SA, Exxon Sale and Supply LLC and Shell Western Supply and Trading received term allocation of 32, 000 bpd each totaling 128, 000 bpd representing about 13 percent of total volume of crude oil on offer.
Nigerian downstream players with wide experience in crude trading and large asset base accounts for 405, 000 bpd representing about 41 percent of total crude volume on offer. In this category, Emo Oil & Petrochemical Coy/China Zhenhea- an NNPC long term trader is allocated 45, 000 bpd. Other off-takers in this category include: Northwest Petroleum and Gas Ltd, 45, 000 bpd, Forte Oil, 45, 000 bpd, Oando PLC, 60, 000 bpd, Sahara Energy Resource Ltd, 60, 000 bpd, A.A. Rano Nig. Ltd, 45, 000 bpd, Eterna Oil, 45, 000 bpd and MRS Oil &Gas Coy Ltd 60, 000 bpd.
NNPC Trading Companies Calson/Hyson 32, 000 bpd and Duke Oil Incorporated 90, 000 bpd account for combined off-take of 122, 000 bpd representing about 12 percent of total volume on offer.
Apart from ensuring transparency, the companies were carefully chosen based on their track records and trading experience to ensure that Nigerian crude cargoes are not left unsold.