History of Petrol Price Increases
By
Jul 1, 2003, 15:21

The latest increase in prices of various grades of petroleum products makes it the eleventh time the Federal Government will be undertaking such exercise since the first uniform pricing was introduced on October 1, 1973. In that year the price of premium motor spirit (PMS) or petrol was fixed for 95 Kobo, diesel 88 Kobo, Kerosene 18 Kobo. Six years later, petrol went to N1.53K, diesel N1.10k, and Kerosene N1.05k.

The problem with the implementation of uniform pricing at that time was that it was more profitable to market products in some areas around seaports, while oil firms were not willing to expand their facilities to the hinterland.

In 1986, with the introduction of structural Adjustment Programme (SAP) and subsequent devaluation of the naira, petroleum products prices were reviewed upwards to Petrol N3.95K, diesel N2.95k, and kerosene N1.05k From 1986 to 2000, the price of petroleum products were reviewed seven times.

The adjustment in 2000 under the democratically-elected government, marked a turning point in the economy as petrol moved up to N30, diesel N29, and kerosene N27, according to government, was justified for the reasons of the high spot market price of crude oil and the need for higher margins for NNPC to meet operational and capital cost.

Owing to public outcry championed by the Nigeria Labour Congress (NLC), a government negotiating team was set up to dialogue with the NLC team. As a result, the price of petrol was reduced to N22 per litre, diesel N21 per litre and Kerosine N17 per litre.

However, determined to find a lasting solution to perennial fuel crisis in the country, the team that negotiated with NLC in January 2000 was inaugurated. Led by the former secretary for National Planning, Rasheed Gbadamosi, the special committee on the review of petroleum products supply and distribution sought the deregulation of the sector to allow private sector participation and investment instead of monopoly by NNPC.

On January 1, 2002 the Federal Government announced yet another hike in price of petroleum products as a way of allowing oil firms to participate in products importation. The price of petrol rose to N26 per litre, diesel N26 and Kerosine N24.

Although the Petroleum Products Pricing Regulatory Committee almost achieved its desire as quite a few of the oil marketing firms such as Mobil Oil Nigeria PLC, Unipetrol, African Petroleum PLC and Texaco ventured into products importation, this was short-lived as crude oil prices in the international market rose from $22 per barrel to over $30 per barrel towards the end of tat year.

This, however, led to the withdrawal of the oil firms from the business, leaving only NNPC.

Between 2000 and 2002, NNPC claimed it had lost N159 billion to products importation alone.

The Special Adviser to the President on Petroleum Matters and a strong supporter of liberalisation, Funso Kupolokun, said recently in Lagos that the best thing for the oil sector now was for government to withdraw its yearly N1.2 billion subsidy on fuel importation, adding that if the sector was liberalised, it would yield over N250 billion yearly to the nation’s economy.

With the inauguration of PPPRA by President Olusegun Obasanjo and subsequent review of prices of petroleum products, Nigerians would like to see the refineries improved in the next few months as well provisions of benefits to cushion the effect of the new price hike.


© Copyright 2006 nigeriafirst.org