The Nigerian National Petroleum Corporation (NNPC), on Thursday said the Federal Government could no longer afford the N120bn ($263.25m) subsidy on Premium Motor Spirit monthly, saying Nigerians would have to pay the actual cost sooner or later.
The Group General Manager, Mele Kyari, who spoke at the weekly ministerial briefing at the Presidential Villa, Abuja, said while the actual cost of importation and handling charges amounts to N234 per litre the government had been selling at N162 per litre therefore bearing the difference.
He argued that market forces must be allowed to determine the pump price of petrol in the country.
Although he claimed the nation was not in a subsidy regime, he said the government was trying to exit what he described as ‘under-price sale of PMS’.
He said, “Today, NNPC is the sole importer of PMS. We are importing at market price and we are selling at N162 per litre today.
“Looking at the current market situation today, the actual price could have been anywhere between N211 and around N234 per litre.
“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 today, 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-price sale of PMS until we come to terms with the full value of the product in the market.
“PMS sells across our borders anywhere around N300 per litre and in some places up to N500 to N550 per litre.
“Our current consumption is evacuation from the depots about 60 million litres per day; we are selling at N162 to the litre, and the current market price is around N234, actual market price today.
“So, the difference between the two, multiplied by 60 million x 30 will give you per month. I don’t have the numbers now. This is simple arithmetic that we can do but if you want exact from our books, I do not have it at this moment but it is somewhere between N100bn and N120bn per month. I don’t have the exact number.”
He explained that upon full implementation of deregulation, he expected that all oil marketing companies would commence import, thereby lifting the import burden off the corporation.
He said once that was done, the Direct Sale-Direct Purchase programme would end automatically because market forces would then determine import and export.
Admitting that access to foreign exchange was one of the major reasons why oil marketing companies had not started importing, Kyari said work was ongoing on this in conjunction with the Central Bank of Nigeria.
As soon as the issue was sorted out, he said, oil marketing companies would also resume import of petroleum products.
