Speaking to journalists in Abuja on Monday, the Minister of Information and Culture, Alhaji Lai Mohammed, who was accompanied by the Group General Manager (Group Public Affairs) of the Nigerian National Petroleum Corporation (NNPC), Alhaji Garba Deen, said this is not the time for any action that would further worsen the nation’s economy.
He said the situation that informed the new regime of the price of petroleum is dire, saying it is a global crisis, and that the policy was designed to permanently solve the problems.
‘’For instance, the United Arab Emirates, the third-biggest oil producer in OPEC, has become the first country in the oil-rich Persian Gulf to remove transport fuel subsidies. In addition, the country has announced that with effect from August 1, 2016, fuel prices will be deregulated’’, the minister stated.
‘’Also, in response to fiscal pressure caused by the fall in crude oil prices, OPEC’s top oil producer Saudi Arabia has announced a plan to raise fuel prices. You can now see that this is indeed a global problem.’’
Mohammed said with the drastic fall in the price of crude oil, which is the nation’s main foreign exchange earner, drastic reduction in the amount of foreign exchange available, the unavailability of forex and the inability to open letters of credit — which had forced marketers to stop product importation and imposed over 90% supply on the NNPC, since October 2015, in contrast to the past where NNPC supplies 48% of the national requirement, the federal government had no option than to announce new price of the product.
The federal government’s spokesman added: “The truth is that the NNPC does not have the resources for, nor is it designed to meet this increase in supply. The result is the crippling fuel situation across the country.
‘’Pushed to supply 90% of the products required for domestic consumption, the NNPC has continued to utilize crude oil volumes outside the 445,000 barrels/day allocated to it, thereby creating major funding and remittance gaps into the Federation account.
‘’As I said earlier, there is no provision for subsidy in the 2016 Appropriation. The erstwhile PMS price of N86.50 gives an estimate subsidy claim of N13.7 per litre which translates to N16.4 billion monthly. There is neither funding nor appropriation to cover this.’’
The minister added that the renewed insurgency and pipeline vandalism in the Niger Delta had also drastically reduced the national crude oil production to 1.65 million barrels per day, against 2.2 million barrels per day planned in the 2016 budget, saying this had further reducing income to Federation Account and also affecting crude volumes for PMS conversion and impacting Federal Government’s forex earnings.
‘’Let me also note that the resultant fuel scarcity has created an abnormal increase in price, resulting in Nigerians paying between N150 and N300 per litre as prevalent hoarding, smuggling and diversion of products have reduced volumes made available to citizens’’, the minister further stated.
‘’In the absence of available forex lines or crude volumes to continue massive importation of PMS, it is clear that unless immediate action is taken to liberalize the petroleum supply and distribution, the queues will persist, diversion will worsen and the current prices will spiral out of control.’’
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