Nigerians might be facing tough times ahead as the Nigerian National Petroleum Corporation (NNPC), on Thursday, said it may no longer be able to pay subsidy of between N100 and N120 billion a month to keep the pump price at the current level.
It noted that going by the current market situation, the actual price of petrol could have been between N211 to around N234 per litre.
Group Managing Director (GMD) of the NNPC, Mele Kyari, disclosed this at the weekly presidential ministerial media briefing featuring the Minister of State for Petroleum Resources, Timipre Sylva, at the Presidential Villa, Abuja.
He said the product is currently being sold below the cost of importation, causing the NNPC to pay the difference.
While refraining from calling the payment a subsidy regime, Kyari said the NNPC pays between N100 and N120 billion a month to keep the pump price at the current levels.
He added that the corporation could no longer bear the cost as market forces must be allowed to determine the pump price of petrol in the country.
The GMD stated: “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, the actual price could have been anywhere between N211 to around N234 per litre.
“The meaning of this is that consumers are not paying the full value of the PMS that we are consuming but 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 because we can no longer afford to carry it on our books.
“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 in terms of 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. 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, the actual market price today.
“So, the difference between the two, multiplied by 60 million by 30. I don’t have the number now, this is a simple arithmetic that we can do but if you want exact figures from our books, I do not have it at this moment but it is anywhere between N100 billion and up to N120 billion per month.
”Kyari added that with full deregulation, oil marketers will begin to import PMS, thereby taking the burden off NNPC and bringing Direct Sale-Direct Purchase (DSDP) programme to an end.
He added: “Upon the full implementation of the deregulation, we expect that all oil marketing companies to commence import, even now, so that that burden of import will be taken away from the NNPC or even the supply when local refinery is made available so that NNPC will not be sole supplier of PMS in this market.
“So, once this situation arises, you are sure that the DSDP programme will automatically vanish, because you will have no further need for it because market forces will now determine the import and export.
“We know there is one major challenge why oil marketing companies have not started importing, which is centred round access to foreign exchange and we are working on this with the Central Bank of Nigeria (CBN) and as soon as that is available, oil marketing companies will also resume import of petroleum products.”
