The federal government made the official weekend that it was returning to the subsidy era as the price of crude itches close to 66.7 U. S dollars per barrel.
Group Managing Director of Nigerian National Petroleum Corporation, NNPC, Maikanti Baru, Friday confirmed that President Muhammadu Buhari had directed against the removal of subsidy from petroleum products sold to Nigerians, a move that would have made Nigerians pay as much as N171.40 being landing cost.
The development is forcing the Federal government to return to fuel subsidy regime, after migrating the country from fuel subsidy provisions in the 2017 and 2018 budget.
READ ALSO: As oil price hit US$85/barrel, concerns rise over NNPC subsidies
But Baru who spoke with State House Correspondents at the Presidential Villa, however, did not reveal how the government will make up for the difference but said President Muhammadu Buhari directed NNPC to maintain products supply at the current price rate.
Following the revelations, financial analysts believe that government will now be forced to raise a supplementary budget to cover the new cost to enable NNPC to raise money to fund the difference since the law does not allow the government to spend money without approval from the National Assembly.
Managing Director, Financial Derivatives Company Limited, Bismarck Rewane, in a telephone chat with BusinessDay in Abuja, however, sees open window for government in the deference between the oil benchmark of 47 U.S. Dollars passed by the National Assembly and the rising crude oil price, which is close to 67 U.S. Dollars.
“There is a window for the government to send in supplementary budget and government will be relying on the difference between the benchmark and the current price of crude oil”
Fuel subsidy rose to N1.9trillion under the regime of former President Goodluck Jonathan in 2015 before the Buhari’s administration migrated Nigeria from the subsidy regime in the 2016 budget.
Rewane, however, feared that the current situation may lead to another subsidy challenges which reduced Petroleum importation to an all-comers affair.
It is not yet clear, whether other oil marketers outside of the NNPC will be allowed to also import Petroleum products and sell at the same rate.
Baru who put the current landing cost as should be sold in the pump without under-recovery, at N171.40 per litre, added that the President directed that government will maintain the N145/litre, while depot price remains at N133.28 per litre.
“Do you want me to remove subsidy? What I am saying is that the landing cost as should be sold in the pump without under-recovery should be N171.40, however, Mr President has directed that we should maintain all the parameters to ensure that it is sold at N145 per litre. And that is why we are selling at the depot at N133.28”
The government also announced that it has tamed what it described as “the monster of fuel scarcity” that reared its head as a result of the rumoured price increase about three weeks ago.
NNPC on Thursday had loaded 1,750 trucks for onward distribution of products to different parts of the country, with a promise to continue massive load out until the former position is restored.
Baru also announced that eight vessels are currently discharging products at various ports around the country.
“Nigerians should enjoy the new year and that Mr President’s directive and guidance which has been very helping have been executed and normalcy has returned.”
Baru said the rumour had” instigated marketers to be very greedy” adding that they “decide that their fellow citizens should not enjoy the Christmas holiday and new year with ease and decided to profiteer starting by hoarding and diversion of products.”
“At the beginning I did address the press, telling the world that we have sufficient products that will last us 30 days through the new year into January but because the marketers wanted to inflict harm and pains on fellow citizens, they decided to hoard products, divert them and in some cases even smuggle products out of the country.”
“As of this morning, I have gone round the Abuja metropolis and I have seen that the queues have reduced significantly to an almost normal level and few motorists that I heard speaking on morning programmed concerning what I have seen said they have not spent up to 30 minutes to fuel their car.”
Baru who declared that NNPC has enough fuel that will last the nation for 30 days, blamed the crises that followed on some “greedy marketers” who created “the monster”.
He however ever assured that the ” monster” has been tamed in Lagos, adding that ” the situation has been brought into normalcy as far as two days ago and we are also aching the same thing in all other cities”
READ ALSO: Why we are subsidising petroleum products – Baru
“I promise that we have sufficient products that will last us for the next 30 days and we keep bringing in 50% over and above our normal consumption into the country.
“Those marketers that have hidden products in odd locations you better bring them out and sell to the public at N145 per litre maximum. If NNPC sold it to you at N133.28, you have sufficient margin within that ambit to be able to supply and sell to the public at maximum N145 per litre”
“The NNPC is selling at N143 per litre so you should be able to sell at N145 per litre. If you go above that, the regulator, DPR and PPPRA with the support of law enforcement agencies particularly the civil defence, will make sure that the products are confiscated and given free to the public. This is the directive that we are working on by Mr President and is being executed to the later. Bring them out and sell these products, we don’t have any shortage and we are making massive loadings”
He announced that the law enforcement agencies, particularly with the Nigeria Security and Civil Defense Corps ( NSCDC), have been mandated to take action against marketers hoarding Petroleum products
” They have helped us to mob up those people selling in Jerry cans and have also helped us to mop out some of the cars that have extra tanks at least within Abuja and environs and around the country”
“The legal action is to apprehend the culprits first and then take them to the courts within the time limit that is speculated”
Tony Ailemen, Abuja
