A Review of the Nigerian Energy Industry

Fuel subsidy distorts govt revenue distribution – Kachikwu

…Vows to stop fuel importation
Kunle Kalejaye 21 August 2015, Sweetcrude, Lagos – The Group Managing Director of ‎Nigeria National Petroleum Corporation, NNPC, Dr. Ibe Kachikwu, has added his voice to the campaign against fuel subsidy in Nigeria, saying it distorts government’s revenue distribution.

Dr. Ibe-Kachikwu
Dr. Kachikwu

Kachikwu, who made his position known at the 2015 conference of the National Association of Energy Correspondents, NAEC. in Lagos explained that the distortion comes as a result of round tripping and unnecessary carryover of expenditures yearly in a way that is difficult for government to control or sustain.

Represented by the Acting Managing Director of National Engineering and Technical Company, NETCO, Mrs Bola Ashafa, Kachikwu said subsidy accounted for 20 percent of Federal Government budget in 2015.
“I will want to add my voice to those that have continued to remind us that fuel subsidy is unsustainable. Over N5 trillion was expended between 2006 and 2012,” Kachikwu stated, calling for a speedy implementation of deregulation, which he described as essential for the transformation and growth of the downstream sector.
He added that the implementation of the deregulation policy will go a long way in encouraging inflow of private sector and international investment.
“It will ensure that Nigerians derive fair deal from the abundant petroleum resources in the country through fair product prices for consumer and full cost recovery and reasonable margins for operators.
“Implementation of the policy will entrench efficiency in product usage, product availability and effective competition among investor, hence putting an end to product shortage.
“However, critical enablers such as security of the supply and distribution infrastructure must be assured to guarantee the availability of the petroleum products at affordable prices,” he said.
Commenting on Nigeria’s continued fuel importation, Kachikwu said “we are strategically going to ensure this is no longer the case in the next few years.
“NNPC has resolved to implement a new strategy to transform the Nigerian midstream oil sector into a transparent, efficient and fair market by ensuring the rehabilitation of the brownfield refineries using new business model.”


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