FG Spends N120bn monthly on Fuel Subsidy–FG

0
137

The Federal Government, yesterday, said it spends N120 billion ($263,248 million) monthly subsidizing Premium Motor Spirit (PMS) also known as petrol with about .

Group Managing Director (GMD), Nigerian National Petroleum Corporation (NNPC), Mele Kyari, disclosed this at the fifth edition of the special ministerial briefings coordinated by the Presidential Communication Team.

N100-120 billion a month to keep the pump price at the current levels, insisting that market forces must be allowed to determine the pump price of petrol in the country.

Kyari said: “Today, NNPC is the sole importer of PMS, we are importing at market price and we are selling at N162 per litre to day. Looking at the current market situation today, the actual price could have been anywhere between N211 to around N234 to the liter. The meaning of this is that consumers are not paying for the full value of the PMS that we are consuming and therefore, someone is bearing that cost. As we speak, the difference is being carried on the books of the NNPC and I can confirm to you that the NNPC may no longer be in the position to carry that burden and because we can longer afford to carry it on our books.

“As we speak today, I will not say we are in subsidy regime but we are in a situation where we are trying to exit this under-priced sale of PMS until we come to terms of the full value of the product in the market.

“PMS sells across our borders anywhere around N300 to the litre and in some places up to N500 to N550 to the liter.

Kyari added that upon full deregulation, oil markets would begin to import PMS thereby taking the burden off NNPC and bringing direct sale-direct purchase (DSDP) Programme to an end.

“We know there’s one major challenge why oil marketing companies have not started importing which is around access to foreign exchange and we are working on this with the Central Bank of Nigeria and as soon as that is available, oil marketing companies will also resume import of petroleum products.” 

On the two agreements between Nigeria and Niger Republic for the importation of  petrol from the neighbouring country to Nigeria, Sylva explained that it was a way to boost trade between the two countries.

Nigeria and Niger had in July 2018, agreed to build a pipeline to bring crude oil from Niger to the proposed Katsina Refinery. The agreement was followed in 2020 by another one signed between the two countries on petroleum products transportation and storage.

Sylva said Nigeria wants to legalize the thriving illegal petroleum products sale already going on between the countries, adding that it also needs to share its experience in the oil exploration sector with neighboring countries.

“You know that Niger is a smaller country and Nigeria is more experienced in oil exploration than most countries in Africa. You find out that most of these countries have these constraints. Although, we have this agreement with Niger, they have constraint on how to deliver on it to this country because of the contract they have with the Chinese. So, if we realize that they have constraints we can change. The whole idea is that Niger has 20,000 bpd which is even bigger than their consumption.

“We want to begin to create business with out neighbors. This is what ECOWAS and AU are trying to encourage.  That is inter-regional trade and begin to trade among ourselves.

“The process has been completed and there were 161 winning bids and they have been notified and we have started receiving signature bonuses paid by the winners. At least from the last account report I got from DPR, almost 50% of the winners have paid. What we are expecting from the whole process is about $600 million and of course we have also given allowance for people to pay in naira so you have to pick which currency to pay in in naira or dollars.

“So, at this point we cannot give any figure in any currency (referring to how much is paid so far) but just to tell you that payments have been encouraging and they have up to April 20th. So, there is some time; although the jury is still out but we believe that by April we would have got a lot of them to pay.”

READ ALSO: World Bank president commends FG for removing fuel subsidy

Sylva also spoke on the imminent passage of the Petroleum Industry Bill (PIB) and what it holds for the country. He said the leadership of National Assembly has assured that it is working assiduously to pass the PIB in April 2021.

Sylva told reporters that the bill would not suffer a setback going by all indications from the leadership of the National Assembly.

He stressed the importance for Nigeria to steer away from oil to gas, adding that the 20-year-old PIB would attract a lot of investments to the gas sector.

Meanwhile, the Federal Government is targeting the establishment of 2,000 Compressed Natural Gas filling stations in the next six months.

Rainoil Ltd. Group Managing Director, Gabriel Ogbechie, who made the disclosure said the move was aimed at providing a cheaper and cleaner alternative for vehicle users as the country moves toward the full deregulation of the downstream petroleum sector.

He spoke during a webinar on “Deregulation and Sustainable National Energy Future through Natural Gas,” organised by the National Association of Energy Correspondents.

Ogbechie said a N200 billion infrastructure fund has been set up by the Central Bank of Nigeria (CBN) to support auto-gas facility roll-out by marketers.

“Nigeria requires about $6 billion worth of investment. Marketers can leverage on this opportunity by investing in gas adoption and utilisation. Investment can be made in areas such as Liquefied Petroleum Gas (LPG) bulk storage, LPG trucks, LPG filling plants, LPG skids and gas cylinder manufacturing, LNG plants.”

He maintained that government could not continue to subsidies Premium Motor Spirit, noting that N10.413 trillion was spent on fuel subsidy between 2006 and 2019.

He said the huge funds could be channelled to other critical sectors of the economy such as health care, education and infrastructure development.

Ogbechie expressed optimism that the passage of the Petroleum Industry Bill would bring about the deregulation of the downstream sector by law and not by government policy.

Watch Leakblast TV channel from around the world

Call Us:+234(0)8080859239
Get us on Whatsapp: +234(0)8181166425      
Email Us: editors@leakblast.com

SUPPORT LEAKBLAST JOURNALISM OF INTEGRITY AND CREDIBILITY

Good  journalism costs a lot of money.

For continued free access to the best investigative journalism in the country we ask you to consider making a modest support to this noble Endeavor.

By contributing to LeakBlast, you are helping to sustain a journalism of relevance and ensuring it remains free and available to all.

Support LeakBlast

LEAVE A REPLY

Please enter your comment!
Please enter your name here