(Ecofin Agency) - The Nigerian Petroleum Products Pricing Regulatory Agency (PPPRA) in its new pricing template revealed that the Federal Government will restart the payment of subsidy on petrol as the product is now being sold below the expected open market price.

Under the new template which is to cover Q2 of 2016, the expected open market price of petrol has increased to N99.38 per litre for independent and major oil marketers, while for retail outlets owned by the Nigerian National Petroleum Corporation (NNPC) it decrease to N98.62 per litre.

However, a source from PPPRA had said that the pump price of fuel is still N86.50 for major and independent marketers, and N86 for NNPC retail outlets. The source added that the difference between the two prices would be sorted out via the payment of subsidy.

The undisclosed source highlighted that the payment would, not be at any extra expenses or burden to the federal government as it will be financed from savings gathered in Q1 when the market was selling more than the expected open market price due to the declining oil price in the global market.

According to the Minister of state for petroleum resources, Emmanuel Kachikwu, around N100 billion had been gathered from the market and the fund would be saved and used to fill the gaps when the market starts to under-recover.

Therefore, at the price of N86.50 per litre for major and independent marketers, and N86 per litre at NNPC retail outlets, the federal government is to pay N12.88 and N12.62 per litre of petrol as subsidy, Leadership news reports.

Anita Fatunji