Ike Amos
30 April 2017, Sweetcrude, Abuja — Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, has noted that it is no longer sustainable for the Nigerian National Petroleum Corporation (NNPC) to continue to feature prominently in the downstream petroleum sector, stating that in the long run, the NNPC would be made to cut down on its participation in the sector.
Kachikwu, who was speaking in a podcast share on his social media pages, said the need for the NNPC to reduce its presence in the country’s petroleum downstream sector was as a result of the cost on its books, adding that the NNPC would have to begin to operate as a profit entity.
According to Kachikwu, due to the rising cost of crude oil and subsequently, petrol, a number of oil marketers had stopped importing, leaving the NNPC as the importer of majority of the petrol into the country.
He said, “The environment has since changed. When we did all these, pricing for crude was more in the $25 to $30 per barrel; today, it is in excess of $54, which is fantastic because it means that our revenue stream is improving.
“But, it is a twin window, whenever the price of crude goes up, obviously the price of refined petrol goes up and we begin to have systemic challenge in terms of the pricing on the local base. So that gap has begun to return and today what you find is that the NNPC continues to import massively on behalf of the Federal Government. It has gone back to about 90-95 per cent for the whole country and therefore its books are absorbing some of the cost implications of this.
“The second is that once this happens the marketers begin to shift backwards. Participation by individual marketers to help us continue the normal business and marketing cycle that should be what you expect, is no longer existing. Most of them are not importing.”
To encourage oil marketers to resume importation, Kachikwu said, “One of the things we are doing is that we are looking at our existing templating position, and what we are doing with that is first addressing some of the soft ends of things that affect pricing.
“We are removing too many multi-layered charges on importation. We are working with the ministry of transport to reduce those to what was initially approved by the president, and as such, we should take away a good chunk of the expenses. We are working to see how the Central Bank of Nigeria, CBN, can provide us with a fairly subsidized foreign exchange for products priced in dollars.”
In addition, he disclosed that the Federal Government is considering a situation whereby over a period of time, marketers would take over the responsibilities of the Petroleum Equalisation Fund, PEF, in the area of funding of trucking and keeping prices stable across the country.
He allayed fears of a scarcity in petroleum products, stating that there is adequate quantity of petrol in the country to prevent a recurrence of fuel scarcity.
