PPPRA, Kachikwu explain how N145 price for petrol was reached

The Petroleum Products Pricing Regulatory Agency (PPPRA) and the Minister of State for Petroleum Resources, Ibe Kachiukwu have explained how the Federal Government arrived at N145 per litre as the new price for Premium Motor Spirit (PMS) otherwise known as petrol.
While the PPPRA put the calculations on its latest pricing template, Kachikwu, the petroleum minister, said the price was based on foreign exchange conversion of naira to the dollar.
According to the PPPRA’s pricing template, the cost elements include cost/freight = N109.01, lightering expenses = N4.56, Nigerian Ports Authority (NPA) charges = N0.84, NIMASA charges = N0.22, financing = N2.51, jetty thru’put charges = N0.60 and storage charge = N2.00, which brings the landing cost to N119.74.
The landing cost is added to distribution margins, which include retailers = N6.00, transporters allowance = N3.36, dealers = N2.36, bridging fund = N6.20, marine transport average = N0.15 and admin charges = N18.37, bringing the total distribution charges to N18.37.
According to the PPPRA, the addition of the landing cost of N119.74 to total distribution margins of N18.37 gives a total cost of N138.11 per litre, putting the price at between N135 and N145.
Kachiukwu said the federal government arrived at the new price by “a simple conversion of using foreign exchange at N285. That N285 is from nowhere; it is basically the secondary source that people buy foreign exchange from, versus the N320, which is the black market rate.”
“If you convert it and throw it in, you will get about N141, N142 or N143. So there aren’t much of palliative elements left there for you to use. It is simply, ‘go out, find your product, your cost is covered, there is an opportunity for your efficiency to make money, come and deliver,” the minister who spoke on a television programme yesterday, said
Kachikwu explained further that the government’s decision will reap many benefits. He said, “We want everybody to be able to bring in the products. We want to achieve what was achieved in the marketing of diesel so that government will also not have intervention in petrol. Ultimately, we will let the market dynamics take place.
“In the past few months, the Nigerian National Petroleum Corporation (NNPC), imported the products largely subsidised, but the marketers took advantage and made excess profits. With this new system, they are going to start bringing in their own products and NNPC can sell its own products at its own price. So, there are no more opportunities for the short-term arbitrages unless those benefits in price come from your own efficiency
“What has happened is that we have provided an opportunity in the country for people to take advantage of government’s liberalisation policies and subsidies and make huge sums of money and this can have positive impact on the common man on the street.
“The reality is that if we let the environment free for people to operate you will be amazed at what will happen with pricing. I will almost take a bet with you that in six month’s time when you review this price, you will be amazed at what will happen to the N145 price.”