• Thu. Jun 8th, 2023

    NNPC’s N120bn monthly subsidy on petrol becoming unbearable, says GMD

    For the first time since the Federal Government announced the removal of subsidy in the pricing template for petrol April last year, the Nigerian National Petroleum Corporation (NNPC) on Thursday owned up to continuing the payment fuel subsidy in the country.
    For a long time, the NNPC has remained the fuel supplier of last resort for the country, being the only agency saddled with the burden of importing and distributing petroleum products.
    Other marketers have since abandoned the business due to the scarcity of foreign exchange and declining oil prices at the international market, making it unprofitable.
    The Group Managing Director of the national oil company, Mele Kyari, told State House Correspondents in Abuja that the NNPC “can no longer bear the over N120 billion monthly subsidy for Premium Motor Spirit (PMS), popularly called petrol.”
    Kyari stated this during the weekly media briefing organised by the Presidential Communication Team at the State House, Abuja.
    “The actual cost of importation of petrol and handling charges amounts to N234 per litre, while the government is selling at N162 per litre. What this means is that the NNPC is absorbing the cost differential recorded in its financial books,” he said.
    Kyari who said NNPC pays between N100 billion and N120 billion every month to keep the retail pump price of petrol at the current level of N162 per litre, warned that sooner or later Nigerians would have to pay the actual cost for the commodity, as the corporation can no longer bear the high cost.
    He said the deregulation policy in the pricing of petroleum products was introduced in the country to allow market forces to determine the pump price of petrol in the country.
    “Our current consumption level is about 60 million litres per day, and we are selling at N162 a litre. Current actual market price today is N234. That is about N72 difference per litre.
    “The difference between the two (N72), multiply by 60million, times 30 days, will give you N129.6billion per month.
    “This is a simple calculation to do. If one wants the exact figures from NNPC books, I do not have it at this moment, but it’s between N100billion and N120billion per month.
    “We are putting the difference in the books of NNPC and we cannot continue to bear it,’’ he said.
    The Minister of State for Petroleum Resources, Timipre Sylva, who also spoke at the event, expressed the hope that the problem of fuel subsidy would be resolved once and for all when the Petroleum Industry Bill (PIB) is passed into law in April.
    Sylva said frantic efforts are being made by the legislators to complete work on the Bill and pass it in line with the aspirations of critical stakeholders in the petroleum sector.
    “The National Assembly has expressed the intent to pass the PIB into law by April 2021. Every effort is being made to support the National Assembly to meet this target,” he said.
    While enumerating the gains of the PIB to Nigerians, the minister said it would create additional infrastructure across the petroleum industry value chain.
    The PIB, he said would increase petroleum industry activities, especially from the midstream and downstream sectors as well as enhance the livelihood of inhabitants of oil-producing communities.
    He added that critical infrastructure would also be developed while utilizing the incremental revenue from increased petroleum activities to develop the sector.
    Sylva said the PIB would also provide additional infrastructure in the host communities arising from the host community trust fund established to cater for the interest and welfare of the people of the area.
    The minister further stated that more businesses would be set up to support increased activities within the petroleum value chain.
    “Greater confidence would be engendered with certainty in the petroleum industry, which would lead to increased investments.
    “Nigeria will occupy its place among commits of nations who have updated their petroleum industry laws in line with current realities.
    “The bill will also enable a structured monetization of fossil fuel resources before the whole world turns to renewables.
    “It will also impact positively on the Nigerian economy with multiplier effect on the petroleum sector,’’ he said.
    The minister also expressed the hope that the Bill when passed, would lead to an increase in the use of gas for domestic purposes.
    Besides, he said this would create a healthier society as well as provide job opportunities across the country. (NAN)

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