The Nigerian National Petroleum Corporation (NNPC) has revealed that it spends over N100billion to subsidise petrol monthly.
The NNPC in a statement by its Group Managing Director, Mele Kyari, noted that subsidizing petrol with over N100billion is no longer sustainable.
According to him, the cost of importation and handling charges now amounts to N234 per litre and the product is distributed to marketers at N162 per litre, with NNPC bearing the difference.
Speaking while fielding questions from State House correspondents at the fifth edition of the Special Ministerial Briefings coordinated by the Presidential Communication Team, the NNPC GMD said that it currently absorbs the cost differential which is recorded in its finanacial books.
He noted that market forces must be allowed to determine the pump price of petrol in Nigeria.
Kyari however noted that Nigeria is not in a subsidy regime, adding that the government was trying to exit the under-price sale of PMS.
“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 a 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.”
The NNPC boss further noted that upon full implemetation of deregulation, he expects that oil marketing companies would commence import, which would automatically end Direct Sale-Direct Purchase programme as market forces would determine import and export.
Speaking on the agreement between Nigeria and Niger Republic for the importation of petrol, the Minister of State for Petroleum Resources, Timipre Sylva, noted that the agreement was to boost trade between the two countries.
According to him, Nigeria wanted to legalise the illegal petroleum products sale already going on.
“You know that Niger is a smaller country and Nigeria is more experienced in oil exploration than most countries in Africa. You find out that most of these countries have these constraints.
“Although, we have this agreement with Niger but they have constraint on how to deliver on it to this country because of the contract they have with the Chinese.
“So, if we realise that they have constraints we can change. The whole idea is that Niger has 20,000 bpd which is even bigger than their consumption.
“There is already illegal trading going on between Nigeria and Niger. So, what we want to do is to see how we can legalise it.
“We want to begin to create business with our neighbours. This is what ECOWAS and AU are trying to encourage. That is inter-regional trade and begin to trade among ourselves.”
Ogbodo ThankGod is currently the Managing Director/CEO/Group Chief Editor at Naija Buzz News Network. He was the Chief Editor at NaijaBuzz.News before his new top leadership role. Ogbodo has years of experience in the Nigeria Media Industry and has co-founded some media companies. He is the founder of Ogbodo Solution Nigeria and 1Push.Ng. He loves playing football and is a strong supporter of Lionel Messi who he describes as the greatest footballer of all time.