… says Nigeria subsidising for neighbouring countries

NNPC extends DSDP to avert fuel scarcity during Christmas.

THE House of Representatives on Monday raised the alarm over alleged plans to sink the country through the controversies trailing the fuel subsidy regime.

Chairman, House ad hoc committee investigating the subsidy regime between 2013 and 2021, Honourable Ibrahim Mustapha, disclosed this while responding to the submission of the Group Managing Director of Nigerian National Petroleum Corporation (NNPC) Limited, Mr Mele Kyari, who averred that Nigeria is subsiding West African countries.

While responding to a question on the huge allocation of petrol to states near border towns, the NNPC helmsman lamented that previous efforts made by the Petroleum Product Pricing Regulatory Agency (PPPRA) to install Acquila facility with a view to forestalling illegal transportation of PMS across illegal border failed.

He, however, said: “If you have N5 million, you can cross the borders with trucks laden with PMS and that is the bitter truth: we have porous borders; yes, we have the Customs service but I do not know.

“PMS crosses anywhere to Cameroon through the North-East, Nigerian petrol gets to Upper Volta, Mali; our neighbouring countries hardly import petrol; in fact, some of them do not have the LC cover to back up imports.

READ ALSO:

• Russia-Ukraine updates: Ukrainian forces preparing Luhansk offensive
• Violence erupts in Iran after woman dies in ‘morality police’ custody
• ASUU strike: Reprieve as NANS suspends Lagos protest, awaits Gbajabiamila intervention

“Cameroon refinery got burnt sometime last year or so, since that time, they have not imported petrol and then, still using the product. If you go to Niger, you find that petrol is sold in bottles just like Coca-Cola because, to them, it is a cheaper source why waste their foreign exchange? So, we are subsidising for our neighbours, that is the simple truth.”

In a swift response, Honourable Mustapha said: “There is a committee set up by the seventh Assembly that investigated subsidy. And, in the report of that committee, it was established that 31.5 million litres of PMS were being consumed daily as of that time; that was in 2012.

“Now, in comparison with the figure we are having before us here, 66 million plus litres, one will wonder what increase of consumption is it that within 10 years, we have over 100 per cent increment. How can we justify it?

“For a layman like me, if I say 1,500 trucks were discharged from various depots into the country, it will at least take those trucks five to 12 hours to arrive at their final discharge point and then, it will take more hours to discharge.

“So, how come that these trucks will discharge and return same day and also be able to load to maintain the 64 or 66 million consumption daily?

“And the second issue, if you look at this your table, gasoline price across West African countries per naira per litre. Maybe you will help a layman like me that probably we are simply subsidising for the West African region. Even in Niger Republic, it is sold for N536; in Mali, N577; in neighbouring Benin, N389; in Ghana, N589 and in Togo, N470. In Chad, N362 and in Cameron, N423, whereas the landing cost plus incidentals, profit and whatever as you projected here is N462 in Nigeria and we subsidise it to N162 or N165 or thereabout.

“Don’t you think we deliberately choose to sink the country for the benefits of others? What justification can we say we have to justify this to Nigerians? These are some of the key issues we will like to hear from the horse’s mouth.”

Speaking earlier, the NNPC helmsman, who painted a gory picture of how oil theft and pipeline vandalisation plagued the industry, disclosed that the country, which produced 2.3 million barrel per day before COVID-19, currently produces between 1.2 million and 1.6 million barrel per day, against 1.8 million barrels per day approved by OPEC.

READ ALSO:

• Nigeria Customs auctions 408 impounded vehicles at N4.72m
• Obi links govt officials to oil theft, seeks total overhaul of security architecture
• Ford innovates using pedestrian Bluetooth to alert drivers

Noting that the joint venture partners are entitled to about half of the total production, some of the partners, he said, have declared force majeure, with ExxonMobil shut-in, while Shell has also signified plans to follow suit.

Kyari, who was represented by the company’s Chief Financial Officer, Mr Umar Ajia, said: “We have about 1.6 billion litres incoming, land and marine. This is what is the minimum level we have to maintain, especially as we approach winter. Most of the refineries that we procure are actually shutting down their operations because of the clamour for green energy and COP26 compliance.

“Even gas that is transition fuel for us is being given eight years. Of course, we do not agree. When you look at PMS outlook, we want be closing each and every month with a two billion closing stock. That is the only way you can sustain petroleum so that a marketer do not see some slack and take advantage by begin to hoard product that create, artificial scarcity which can lead to queue.

“There is a huge arbitrage for anybody to move product to outside. We are not saying that the bulk of the product is smuggled. The reality is that there is no study to validate the actual consumption. What we are reporting daily is what the authority, which is the regulator, publishes. They are represented at every depot in Nigeria.

“Exchange rate has been moving steadily from N195.5 to now N390.6 to a dollar, on average. The subsidy scheme is two ways, the fx subsidy and price.

“The shipping cost has doubled, therefore the landing cost of PMS has moved from N87 per litre in 2015 to about N327.68 per litre today. When you compare it to what we sell, you have a N209 on every litre. When you multiply the N209 per litre with an average of 66.7 million litre, you are talking about N3.4 trillion subsidy for the year.

READ ALSO:

• Ukraine, using captured Russian tanks, firms up its lines
• King Sunny Ade Agrees to Meet Woman Claiming to Be His Daughter
• Obi links govt officials to oil theft, seeks total overhaul of security architecture

“The reality today is that if one were to take statistics of the number of vehicles in Nigeria, how many Keke NAPEP do we have? How many pumping machines do we have? On a routine visit, I saw nothing less than a million keke. Take an average that each one uses four litres every day, that is four million litres, one city.

“We have not done a study to validate; people are saying that we are evacuating 66 million a day. That is the reality. Some days, what is evacuated can go as much as 100 million a day, while some weekends, we do zero. The marketers are watching.

“States like Oyo and Ogun states even consume more than Lagos State, so you wonder. Is it that they have more vehicles than Lagos? This explains that these are states with porous borders and that will explain why this bulk evacuation is going out of Oyo and Ogun states, probably neighbouring countries.”

He also informed the lawmakers that the company resolved to extend the Direct Sales Direct Purchase (DSDP) contract, which was billed to end in August 2022, in order to avert fuel scarcity in December and during the 2023 general election.

“It is a very dangerous period to begin to re-tender for that because we are facing the winter. These are the difficult ‘embers months’ that we normally avoid fuel scarcity,” he said.

Before resorting to a closed-door session, Mustapha had directed some subsidiaries, including Duke Oil and NNPC Retail Limited, to appear on Thursday with relevant documents.
Tribune