The Minister of State for Petroleum, Ibe Kachikwu, has announced the reduction in fuel price from N87 to N85 with effect from January 1, 2016.

The minister, who made the announcement on Friday at the Port Harcourt Refinery Company, PHRC, where he inspected the facility, also disclosed that subsidy on fuel would be removed as from the same date.

According to him, the new price template is expected to be announced by Petroleum Product Pricing Regulation Agency, PPPRA, as he had already approved the new price on Thursday.

“Like I said, we have done a modulation calculation and it is showing us below N87. I imagine that if PPPRA publishes it today, it will become effective immediately. But the 1st of January that is when we are looking at,” Kachikwu, who also doubles as the Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, said.

“So for the first time people will understand that the pricing modulation I was talking about is not a gimmick. It is for real. We have gone to find out how we will be able fluctuate this market to reflect what the reality of crude market is.”

This is in line with President Muhammadu Buhari’s statement during the 2016 budget presentation at the National Assembly the fuel price would remain N87 “for now”.

He also gave reasons for the scraping of the Petroleum Support Fund, also called fuel subsidy, saying government cannot afford it due to dwindling revenue.

“The objective is that one, we cannot afford to continue to subsidize.

“We can’t even understand where those subsidies were going to. There is a lot of fraud elements in it so we need to cut that of,” Kachikwu told journalists.

The second reason, the minister said, is the dwindling earning capacity due to falling crude oil prices.

On the security of oil pipelines, he disclosed that private contractors were now handling their protection as the federal government had tried stopping the pipeline vandalism by using troops without success.

The contractors, according to him are working with the majors for the management of the pipelines.

“The private contractors have taken over Atlas Cove, Mosimi and they would be extending the surveillance to Ilorin between yesterday and today,” he stated.