(Ecofin Agency) - The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, on Monday revealed that the country will have to return to the initial pump price of N97 per litre of petrol, in 2016.

Kachikwu made this known while defending the ministry’s projections as contained in the 2016 to 2018 Medium Term Expenditure Framework and Fiscal Strategy Paper. He noted that the country’s economy was not able to support the current price of N87 per litre.

The minister further explained that the aim of the reversal by the Federal Government was to certify that it would no longer fund the subsidy scheme. He added that the government plans to pay over N1tn to fund petrol subsidy this year. According to him, this fund includes the N670bn paid to oil marketers for 48 % of the product imported into the country, and the 52 % brought in by the Nigerian National Petroleum Corporation (NNPC).

“The total subsidy figure for 2015, when taken along with the NNPC’s subsidy payment, will be in excess of N1tn. The current pricing work we are doing has shown that there shouldn’t really be subsidy. The government doesn’t need to fund subsidy. The price of refined petrol today is N87. It was N97 before it was reduced and we really have to go back to that because we don’t really have the finance to fund it. There are lots of safety barometers between the N87 and N97per litre regime. That is the first mechanism we are going to work. It is when that mechanism fails that we will begin to look at a total subsidy exit. We believe we can achieve that”, Kachikwu told Punch.

The former Minister of Petroleum Resources, Deizani Alison-Madueke On January 18, 2015, had announced that the Federal Government had sanctioned the decrease of the pump price of petrol by N10 as a result of the decline in the global oil price.

She said based on that, petrol was to sell for N87 per litre thereby directing all filling stations and regulatory authorities to effect the change immediately.