Subsidy on petrol hits N1.4tn per year, says FG
A total of N1.4tn is now being spent
annually by the Nigerian National Petroleum Corporation as subsidy on
Premium Motor Spirit, popularly known as petrol, the Federal Government
has said.
Although it described the amount as
under-recovery, the government stated that the national oil firm had
been shouldering the huge financial burden, because the NNPC is the
country’s supplier of last resort when it comes to the provision of
petroleum products.
The Minister of State for Petroleum
Resources, Ibe Kachikwu, who disclosed this while speaking at a
Liquefied Petroleum Gas workshop organised by the Federal Ministry of
Petroleum Resources in Abuja on Thursday, also stated that the ministry
planned to unveil an infrastructure rebirth map for the oil and gas
sector in two months.
On March 5, 2018, the NNPC announced
that it was spending N774m daily (about N23.99bn monthly) as subsidy on
the 50 million litres of PMS consumed across the country.
The oil firm stated that the huge
under-recovery was due to the proliferation of filling stations in
communities with international land and coastal borders across the
country.
On Thursday, Kachikwu echoed the fact
that the NNPC was spending enormous resources subsidising petrol, as he
told guests at the programme that about N1.4tn had been declared as
under-recovery by the national oil firm.
When asked if the N1.4tn, which he
earlier mentioned in his address to participants at the workshop, was
the current figure being spent by the NNPC, the minister replied, “Yes,
it’s current.”
Probed further to state what the
government was doing to handle the under-recovery, Kachikwu said, “Let
me focus on gas. That (under-recovery) is being addressed at very high
levels.”
The Group Managing Director, NNPC,
Maikanti Baru, explained that the multiplication of filling stations had
energised unprecedented cross-border smuggling of petrol to
neighbouring countries, making it difficult to sanitise the fuel supply
and distribution matrix in Nigeria.
Baru stated that a detailed study
conducted by the NNPC indicated strong correlation between the presence
of the frontier stations and the activities of fuel smuggling
syndicates.
He said the activities of the smugglers
led to the recent abnormal surge in the evacuation of petrol from less
than 35 million litres per day to more than 60 million litres per day,
which was in sharp contrast to the established national consumption
pattern.
Providing a detailed presentation of the
findings, the NNPC boss noted that 16 states, having among them 61
local government areas with border communities, accounted for 2,201
registered fuel stations.
He stated that the tanks of the stations
had a combined capacity of 144,998,700 litres of petrol, adding that in
the same vein, eight states with coastal border communities spread
across 24 LGAs accounted for 866 registered fuel outlets, with combined
petrol tank capacity of 73,443,086 litres.
Baru explained that because of the
obvious differential in petrol prices between Nigeria and other
neighbouring countries, it had become lucrative for smugglers to use the
frontier stations as a veritable conduit for the smuggling of products
across the borders.
This, he said, had resulted in a
thriving market for Nigerian petrol in Niger Republic, Benin Republic,
Cameroon, Chad and Togo, as well as Ghana, which has no direct borders
with Nigeria.
“The NNPC is concerned that continued
cross-border smuggling of petrol will deny Nigerians the benefit of the
Federal Government’s benevolence of keeping a fixed retail price of N145
per litre despite the increase in PMS open market price above N171 per
litre,” Baru stated.
Kachikwu had earlier told journalists
that the petroleum resources ministry was planning to unveil an
infrastructure rebirth map for the country’s oil and gas sector.
He said the map, which President
Muhammadu Buhari is expected to unveil in the next two months, would
open up the sector to investments in critical areas.
Kachikwu stated, “There is a lot more
private sector investment in upstream than there is in downstream in
terms of actual infrastructure, and that is why the government is more
focused in upstream. We are also hoping to launch an infrastructure
rebirth map for the oil sector over the next two months. And I hope the
President will launch it.
“And the effect of that will be to open
up tariff, create policy positions that will enable people to go in and
invest in critical infrastructure that is needed. Because everywhere you
look, whether it is distribution of petroleum products, it is done
massively through trucks rather than through pipelines.
“Now, whether it is to take crude to
refineries or whether it is being able to distribute gas all over the
country, infrastructure is so key. There is a lot of stranded gas
everywhere, lots of stranded power everywhere; distribution is key,
infrastructure is key. We need to find a way or find enough incentives
that will enable the private sector to go in very bullishly and put the
money where it is supposed to be.”
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