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FG insists Port Harcourt refinery not archaic
By Egena Sunday Ode
The Nigerian National Petroleum Corporation (NNPC) on Thursday cried out over the heavy weight of the burden the monthly payment of N120 billion petrol subsidy is exacting on it, saying that sooner or later Nigerians have to pay the actua price for the commodity.
Group Managing Director (GMD) of the NNPC, Mele Kyari, let this out at the weekly presidential ministerial media briefing organized by the President Buhari’s communication team.
Minister of Petroleum Resources, Timipre Sylva along with NNPC GMD and the Executive Secretary of Petroleum Development Fund, PDF, featured at the event which took place at the Presidential villa, Abuja.
Kyari said the product is currently being sold below the cost of importation, disclosing that the NNPC pays between N100-N120 billion a month to keep the pump price at the current levels.
The NNPC GMD further explained that while the actual cost of importation and handling charges amount to lN234 per liter, the government is selling at N162 per liter forcing the corporation to absorb the differential.
Accordingly, he said the corporation can no longer bear the cost, adding that market forces must be allowed to determine the pump price of petrol in the country In the nearest future.
His words: “Today, NNPC is the sole importer of fuel. We are importing at market price and we are selling at N162 today. Looking at the current price situation, the market price could be between N211 to around N234 per litre.
“The meaning of this us that the consumers are not paying for the full value of the PMS that we are consuming and therefore the NNPC is bearing that cost. As at today, the difference us being carried in the books of the NNPC and I can confirm to you that the NNOC may no longer be in a position to carry that cost.
“That is why early last year, you will recall the full deregulation of PMS and we have followed this through until September when the price shifted above N145, disputes came up between us and the trade unions and the civil societies leading to an engagement between us and organised Labour which prevented the implementation of the actual price of the petroleum product as at that time.
“These engagements are continuimg and the objective of the engagement us actually not to prevent the implementation but to make sure there is sufficient framework on ground to ensure that consumers pay for the actual price of this product and that they are not exploited.
“Secondly, to also put some relief such that the potential effect of the fuel price increase are not transferred to the ordinary people. Part of this us to deepen the auto-gas program.
“With auto-gas program, we will be able to deliver alternative fuel for vehicles including Keke NAPEP so that the price per liter equivalent will probably be half if the PMS at its current price.
“So as we speak today, I will not say that we are in a subsidy regime but we are in a situation where we are trying to exit the underpriced sale of PMS until we come to the full value of the product in the market.
“We want to use this opportunity to tell you that PMS today sells above N200 across our borders and in some places about N500 for a litre. In some countries, the Nigerian fuel is their territory fuel and we are supplying almost everybody in the West African region.
“We cannot continue to afford this because we have our own issues. That’s why the eventual exit from this is completely inevitable. When that will happen I don’t know but I know that some engagements are going on; government is concerned about the natural impact of price increase on our transportation and other consumer aspects of our society.
On the exact amount the NNPC is subsidizing fuel months, he said:
“Our current consumption, evacuation from our depots is about 60 million liters, per day. We are selling at 162 to the liter. Current market price is 234, actual market price today. The difference between the two, multiplied by 60 million times thirty, will give you per month.
“This is a simple arrangement you do. If you want exact figures from our book, I do not have it at this moment but it’s between N100billion and N120billion per month.
“We are putting the difference in the books of NNPC and we cannot continue to bear.
“Today, NNPC is the sole importer of PMS. we are importing at market price and we are selling at N162 per liter today. Looking at the current market situation, the actual price could have been around N211 that you mentioned and around N234 to the liter.
On his part, min, Sylva dismissed insinuations that the Port Harcourt refinery is archaic, arguing that a refinery commissioned in 1989 cannot be described as such.
On why the government is investing $1.5 billion on rehabilitation of Port-Harcourt Refinery when at the same time it is talking about privatization and commercializations, the Minister said “I have always said that our refinery can not survive when with the regime of subsidy; because you can not be refining at a cost and selling at a subsidized rate.
“Now that constraints will be taken away by deregulation. That is the more reason why we must fix our refineries so that our refineries can now function optimally.
“What is better? To privatize a non-functional refinery or to privat use a functional refinery? A functional refinery will definitely fetch more for the government than a non-functional refinery.
“That’s why we feel that we have to rehabilitate this refinery and then the government later will decide on whether to privatize, whether to commercialize. But at this point we want to give Nigerians a functional refinery.”
