Says N145 per litre not sustainable
NNPC incurs N85.5bn loss on importation
Nigerians won’t accept increase – NLC
By Taiye Odewale and John Moses Abuja
Barely one and half years after jerking up the pump price of fuel to N145.00 per litre, there are indications that the federal government has hinted of yet another hike. Indications to this effect were given yesterday by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who said the current N145 per litre regime is not sustainable.
According to him, the landing cost of the Premium Motor Spirit (PMS) in Nigeria, is N171. He dropped the hints while appearing before the National Assembly Joint Committee on Petroleum Resources (Downstream).
Ex-GMDs’ alarm
With just some five months into the new regime of N145 per litre, the current Group Managing Director of the Nigeria National Petroleum Corporation, Dr. Kanti Baru, and his predecessors in office, had, after a meeting, alerted that the price was not feasible.
At the end of the September parley with Kachikwu, the meeting contended that the amount does not correspond with the price-determining components of the commodity and the fluctuations of the foreign exchange rate.
In a statement at the end of the meeting, the NNPC said: “They (the GMDs) noted that the petrol price of N145/litre is not congruent with the liberalisation policy especially with the foreign exchange rate and other price determining components such as crude cost, Nigerian Ports Authority charges, etc remaining uncapped.”
Kachikwu reaffirms position
Re-echoing the position yesterday when he appeared before the NASS joint committee on petroleum resources(Downstream), the minister explained that the nonsustainability of the price fixed in the first quarter of 2016, followed a steady increase in the price of crude in the international market which was $48 in 2016 as against $67 now.
Consequent upon this, he said, the landing cost of PMS which was N133.28k per litre is now N171 per litre. This, the minister revealed, resulted into stoppage of importation of the product by independent marketers, making the Nigeria National Petroleum Corporation (NNPC) to be the 100% importer of the product.
The minister disclosed further that as a result of the N26 difference per in the current landing cost of N171 and pump price of N145, NNPC, which has been singularly importing the product at the volume of 25million litres per day since October last year, has been incurring losses of about N800- N900million daily, which in cumulative term is about N85.5billion till date.
He told the committee that government had mandated him and a committee set up to find ways out of the current logjam. This, he said, requires emergency of about 18 months before the local refineries are knocked into shape. He offered three ways out of the problem.
“One, is for the Central bank of Nigeria (CBN) to allow the marketers access forex at the rate of N204 to a dollar as against the official rate of N305 to keep the pump price of fuel per litre at N145.
“Two, to give room for modular deregulation where NNPC would be allowed to continue selling at N145 per litre in all its mega stations across the country while the independent marketers should be allowed to whatever price profitable to them in all their outlets.
“Three, to look at the direction of blanket subsidy for all the importers in bridging the gap,which would be like going back to a problem that had earlier been solved.”
He, however, stressed that the final solution to the problem was for the nation to put her refineries in good shape, such that 80% of local consumption of the product should be sourced locally. Aside these, the minister added that infrastructural deficits in the sector, like effective railway transportation, functional pipeline network across the country as against trucking by road if put in place, would help in easy distribution of the product.
NNPC’s boss submissions
In his own submission, NNPC GMD, Dr Maikanti Baru said the just ended fuel scarcity was caused by combination of factors, ranging from diversion of the product from depots by tanker drivers to neighbouring countries where it sold between N300 to N400 per litre, to outright hoarding by unscrupulous marketers at home. According to him, the NNPC had, prior to the scarcity, 1.9billion litres in reserve.
The reserve, according to him, was however emptied as a result of panic buying arising from rumour earlier made on social media about price increase, the one-day strike action embarked upon by PENGASSAN, hoarding and diversion by some dubious players in the sector.
Heads of other critical agencies in the sector; like the Department of Petroleum Resources (DPR), Petroleum Product Pricing and Regulatory Agency (PPPRA), Independent Petroleum Marketers Association of Nigeria (IPMAN), and Petroleum Tankers Drivers (PTD) etc, attended the investigative hearing and made submissions.
What NASS says
In his closing remarks, Chairman of the joint committee, Senator Kabiru Marafa (APC, Zamfara Central), said the various submissions made by all the stakeholders, called for urgent solution to the quagmire. He said: ” Th e intervention made today by this committee is very helpful, in the sense that going by statistics given that landing cost of fuel per litre is now N171, which in the long run may result into the product selling for N185 per litre .
“Th is absolutely would not have augured well for the ordinary Nigerians. And that is the reason why this committee and the one set up by the President should come up for people friendly solution as quickly as possible.
” Don’t try price hike, NLC warns
But the Nigeria Labour Congress (NLC), has said Nigerians won’t accept further hike in the price of fuel, saying government and labuor had already reached an understanding on the matter. General Secretary of NLC, Dr. Peter Ozo-Eson, told Blueprint yesterday that government must deal with the current challenges of increase in the landing cost, since it chooses to import the product to the country.
He said, an understanding was recently reached in a meeting chaired by Chief of Staff to the President, Abba Kyari with labour and other stakeholder on the need to maintain the current price of N145 per litre. “We’ve being having meeting with the government in the last three days, and whatever they are saying, the bottom line is that we all agreed that the price of PMS will not be increased now, that the price of N145 per litre be maintained.
“That is the understanding we had with the government and the minister of state for petroleum was also in attendance. The meeting was held in the Villa, and was chaired by the Chief of Staff to the President; Abba Kyari and other stakeholders were there. “The meeting was further broken into different committees on how to ensure supply availability at the current price. So, whatever he(minister) is saying, that is their problem.
How they got into the issue of what is the landing cost, since they have chosen to maintain an import regime order, then that is their own choice.” Ozo-Eson also disclosed that Nigeria would continue to face such challenges, unless government fixed the refineries to refine for local consumption.
On whether private marketers can sell on their own price, since there is no subsidy on the product, the NLC scribe said no. “Government pegged current price at N145 per litre and that price will not change.
That is the understanding we reached with government. How the price is higher, that is the challenge they have to face because there is various discussion going between government, marketers and other stakeholders, and I think they have to deal with that. But clearly, it is a case of unacceptability on the possibility of increasing the price”.
