…As NNPC wails over N120bn monthly subsidy burden
* NLC kicks
The Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, has raised the alarm that the corporation pays between N100billion and N120billion every month as subsidy on petrol.
Kyari made the disclosure on Thursday while answering questions from State House correspondents at the 5th edition of the Special Ministerial briefings coordinated by the Presidential Communication Team.
He said the corporation can no longer bear the burden of subsidizing the product currently being sold at N162 per litre.
Kyari spoke after the Minister of State for Petroleum Resources, Timipre Sylva, had disclosed efforts being made to ensure the passage of the Petroleum Industry Bill.
The NNPC boss, who said the corporation absorbed the cost differential which was recorded in its financial books, disclosed that while the actual cost of importation and handling charges amounted to N234 per liter, the government is selling at N162 per litre.
He said market forces must be allowed to determine the pump price of petrol in the country.
Kyari, however, added that government is being considerate of the actual impact of any price increase on Nigerians.
“Looking at the current market situation today, the actual price could have been anywhere between 211 to around 234 naira to the litre.
“The meaning of this is that consumers are not paying for the full value of the PMS that we are consuming and therefore, someone is bearing that cost.
“As we speak today, the difference is being carried on the books of the NNPC and I can confirm to you that the NNPC may no longer be in the position to carry that burden and because we can longer afford to carry it on our books.
“As we speak today, I will not say we are in subsidy regime but we are in a situation where we are trying to exit this underprice sale of PMS until we come in terms of the full value of the product in the market.
“PMS sells across our borders anywhere around N300 to the litre and in some places up to 500 to N550 to the litre.
“Our current consumption is evacuation from the depots about 60 million litres per day, we are selling at N162 to the litre, and the current market price is around N234, the actual market price today.
“So, the difference between the two, multiplied by 60 million x 30 will give you per month. I don’t have the numbers now, this is simple arithmetic that we can do but if you want exact figures from our books, I do not have it at this moment but it’s anywhere between a hundred billion and up to 120 billion naira per month. I don’t have the exact number.”
He said that with full deregulation, oil marketers would begin to import PMS, thereby taking the burden off NNPC and bringing the Direct Sale-Direct Purchase (DSDP) programme to an end.
“Upon the full implementation of the deregulation, we expect that all oil marketing companies to commence import even now so that that burden of import will be taken away from the NNPC or even the supply for when the local refinery is made available so that NNPC will not be the sole supplier of PMS into this market.
“So, once this situation arises, you are sure that the DSDP programme will automatically vanish because you will have no further need for it because market forces will now determine the import and export.
“We know there’s one major challenge why oil marketing companies have not started importing which is around access to foreign exchange and we are working on this with the Central Bank of Nigeria and as soon as that is available, oil marketing companies will also resume import of petroleum products,” he stated.
But Labour on Thursday night, kicked against the government’s plan to fully deregulate petrol pricing because it is no longer able to sustain the subsidy regime.
The President of Nigeria Labour Congress (NLC), Comrade Ayuba Wabba, said the Federal government should not pass the burden of petrol subsidy withdrawal to Nigerians.
It said Nigerians cannot bear the cost of petrol hike because they have been impoverished, adding that citizens should not be made to pay for the inefficiency of the government.
Wabba argued that an increase in the pump price of Petrol would erode the purchasing power of many Nigerians and further push them down the poverty line.
He said: “Nigerians also cannot bear it (the cost of petrol hike) because they are so impoverished that they can’t also bear the inefficiency of our system for these numbers of years.
“We are the only member of the Operation of Petroleum Exporting Countries (OPEC) that is importing refined products. It is because of the inefficiency of governments – both past and present – that we are not able to fix our refineries.
“For sure, many people have been pushed below the poverty line. Not only that, anytime you increase the price of petrol, prices of goods and services will go up and not only that, the purchasing powers of many Nigerians will also be eroded. It is between the devil and the deep blue sea.
“There must be a way to make sure that Nigerians don’t suffer the consequences of what they have not bargained for. Those are the clear issues i think should come out of these conventions.
“You are aware that economies around the world – including that of Nigeria – just came out of recession and many businesses are not doing well or they have closed and many individuals, including workers, have been pushed almost to the wall.
“The consequences of fuel price hike will be so grievous, it will bring about instability, insecurity because where families can’t take care of their needs you should know also that everybody will be on their own and it will lead to some social consequences.
“We will not accept a situation where the burden will now be shifted from the government to Nigerians. We have submitted a document to point out that 159 countries still subsidise energy in this challenging period.
“Government must find means to make sure that we don’t transfer this inefficiency to the Nigerian public.
“The figure (N120billion) also quoted are issues that are associated with the so-called subsidy because even how many litres we consume per day has remained a controversy. In this type of situation this is where accountability and transparency comes in.
“The policy option of continuing to impose higher pay on Nigerians is not something that can be pushed down the throat of Nigerians at this very difficult time.”