Ibe Kachikwu, Minister of State for Petroleum Resources, on Thursday listed three conditions that must take place for the federal government to sustain the current cap on fuel price at N145 per litre.
The conditions include a special provision of foreign exchange for importers; the provision of a tax holiday for fuel marketers or the introduction of pump price differential between fuel stations owned by Nigerian National Petroleum Corporation (NNPC) and private sector owned fuel stations. This will see the NNPC stations sell at the subsidized N145 per litre why the privately owned stations sell at a market based price.
Kachikwu stated this during the on-going public hearing held at the instance of the joint Senate and House of Representatives’ Committee investigating the cause of recent fuel shortages in the country.
He noted that the Ministry has “no authorization for price modulation”, hence the resolve to work around those indices with the view to ensure some level of competitiveness, efficiency and stable supply despite the challenges.
While noting that “price movement is the very last thing we will do”, he expressed optimism that when some of the refinery projects become operational, the issue of price instability will be addressed.
He said that nobody is stopping the private sector from importing, but maintained that unless the environment on pricing is addressed, the private sector would not be able to import.
“What exchange rate will it take to sell (a litre of petrol) at ₦145? It’s about ₦240, it’s not ₦305 (the current rate)”, Kachikwu explained at the hearing.
“We have to address the issue of pricing”
He said the committee set up by the Federal Government is targeting 18-months emergency period for all the problems associated with fuel scarcity to be resolved.
He attributed the emergence of fuel scarcity to logistic problems, diversion of petrol, lack of sufficient reserve and supply gap arising from the lack of participation of major stakeholders in the industry in importing petrol.
According to him the situation at the Apapa port has been a major problem as it created delays for tanker drivers from lifting product from the various depots around the port city.
In the bid to address the issue headlong, Kachikwu called for prompt enforcement of the law to check incessant diversion of petroleum products from Nigeria to the neighbouring countries.
The Minister also called for adequate policing of the country’s borders to frustrate the continued diversion of petroleum products.
He however accused some marketers of illegally maximising profit by diverting fuel supplied in Nigeria.
According to him, the incentives are attractive to those diverting these products because while petrol sells for about N300 per litre in some countries, we are selling at N145 per litre, so you can see that they are making huge profit.
“Our borders must be properly policed and the law must be enforced in such a way that every marketer must account for every petrol that leaves his depot,” Kachikwu said.
The Minister, while decrying the infrastructural decay in the oil sector, said there was need for private sector involvement in managing some critical facilities.
“For instance, there is need to encourage private sector involvement in the protection of pipelines.”
In his intervention, Sam Ohambuwa Mao insisted that the senate did not see any request from NNPC for subsidy, while NNPC is already subsidizing for the excess amount.
He maintained that there was no supplementary budget before the National Assembly, as alleged by the Ministers.
Obafemi Olawore, Executive Secretary, Major Oil Marketers Association of Nigeria (MOMMAN) argued that Federal Government is owing N800 billion adding that there is need for total deregulation of the downstream sector in the bid to address the perennial scarcity of petroleum products in the country.
On his part, Dapo Abiodun, Depot and Petroleum Marketers Association of Nigeria, who stressed that NNPC was not prepared for the 100 percent fuel supply, maintained that private sector must take over the 70 percent supply henceforth.
Olusola Bello, Lagos and KEHINDE AKINTOLA, Abuja
