In a podcast posted on his social media account, Kachikwu,
however, stated that the Federal Government would undertake another review of
the pricing template for petrol, to remove several multi-layered charges and
costs that affect the pump price of petrol at retail stations.
Kachikwu stated that due to the rising cost of PMS, also
known as petrol, a number of oil marketers had stopped importing the commodity,
leaving the NNPC as the major importer of majority of the product 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.” On the Federal Government’s plans,
Kachikwu stated: “One of the things we are doing is that we are looking at our
existing template 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 subsidised foreign exchange,
FX, for products priced in dollars.” He further stated 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,
of funding trucking and keeping prices stable across the country.
He also disclosed that in the long run, the NNPC would have
to reduce its presence in the country’s petroleum downstream sector because of
the cost on its books, adding that the NNPC would have to begin to operate as a
profit entity.
He assured that there is adequate quantity of petrol in the
country to prevent a recurrence of fuel scarcity. He said, “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 have 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 litres to 37 million litres a
day.”
By Michael Eboh
