Nigerian Government has announced plan to further review its
pricing template for petrol with the aim of removing several multi-layered
charges and costs that affect the pump price of petrol at service stations
across the country.
Government said it would continue to work with the Central
Bank of Nigeria (CBN) to find ways of providing subsidised foreign exchange
interventions for oil marketers in the country.
Minister of State for Petroleum Resources, Dr. Ibe Kachikwu,
on Saturday, lamented that the Nigerian National Petroleum Corporation (NNPC)
currently imports nearly all litres of petrol used in the country at a huge
cost.
According to him, marketers in the country were no longer
importing petroleum products because of the unfavourable business fundamentals
which had been influenced by the rising prices of crude oil.
“Downstream continues to be an area that has numerous
challenges, that is why throwing ideas on them will continue to be something
that any minister or chief executive of NNPC will continue to focus on,” said
Kachikwu.
“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”.
On way forward, 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 end 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 approve by the president, and as such, we should take away a
good chunk of the expenses. We are working to see how the CBN can provide us
with a fairly subsidised FX for products priced in dollars.”
On product availability, Kachikwu assured that, “There isn’t
fuel scarcity, we are not short of products, but yet the downstream and
midstream sectors continue to remain challenged. And what we are going to do is
to analyse what we have done so far and begin to throw solutions to some of
these challenges.”
“We had issues of pricing efficiency and governance, for at
that time the prices we were selling at were so ridiculously below what the
sustainable prices are. And you find a situation where basically marketers
disappeared from the industry. So, we had massive shortages, queues and
everything seem to be breaking down. We’ve since come out from that.
“First we’ve moved from a fully subsidy-based sector to a
partially liberalised sector. I say partially because we haven’t quite achieved
the template to have a fully liberalised sector. What that has done for us is
that it had reduced consumption from 50 million liters to 37 million liters a
day,” he stated.
