Fuel Scarcity: Nigerian govt gives mixed signals on possible price increase

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Two government officials on Thursday gave diverse indications on what government is considering to resolve the current petrol scarcity.

While a state governor who briefed journalists after a meeting presided by Vice President Yemi Osinbajo hinted at a possible price increase, the Minister of State for Petroleum said such was not being contemplated.

The federal government and the state-owned NNPC have repeatedly vowed that there was no plan to increase the N145 per litre official price of the product despite the scarcity. This is despite the fact that most Nigerians across the country pay about N200 per litre to buy the scarce commodity.

An indication of the possible price increase was provided by a state governor who briefed journalists at the end of the National Executive Council, NEC, meeting. The meeting, attended by most state governors, was presided by Vice President Yemi Osinbajo.

Governor Mohammed Abubakar of Bauchi told journalists that the NEC asked one of its committees, interfacing with revenue agencies in the country, to work on getting the correct price for petroleum products.

He said the committee is headed by the Governor of Gombe State, Ibrahim Dankwambo.

Mr. Abubakar said the committee “has been charged with the responsibility of interfacing with NNPC with a view to determining the correct price for PMS (petrol) considering the price of the product especially in countries that are bordering Nigeria.”

The Bauchi governor said the NEC realised that the price differential between Nigeria and her immediate neighbours is one of the reasons why the product is being smuggled thereby causing its scarcity in the country.

While Nigeria, Africa’s largest oil producer keeps its official price at N145 per litre, the price is as high as N375 per litre in neighbouring countries like Chad, according to a petrol price monitoring website, globalpetrolprices.com. The NNPC and other government agents and officials have blamed this price differential for the large scale smuggling of petrol to neighbouring countries. Critics have however described such large scale smuggling as failure of government that has failed to secure the country’s borders.

On Thursday, Mr. Abubakar said the NNPC Group Managing Director, GMD, Maikanti Baru, briefed the 85th NEC meeting.

He said Mr. Baru told the council that the scarcity is also partly caused by an inter-play of the exchange rate of the naira to the dollar and the price of crude oil at the international market which affects the landing cost of refined products in Nigeria.

He said the process makes the operation of the N145 price almost impossible without some measured assistance. The NNPC had recently said it was bearing the loss on behalf of Nigerians for petrol to be sold at N145 per litre.

“As at today, most, if not all independent marketers have stopped importing refined products into Nigeria. It is only the NNPC that has been doing it. And the NNPC has been suffering a lot of setbacks.

“If the product lands at N170 for example and you sell at N145, immediately you know that you have an under recovery of about N25 for each litre of fuel,” the Bauchi governor said.

The petroleum minister, Ibe Kachikwu, also on Thursday, however, said the government was not considering a price hike.

He said the federal government is set to finalise the decision on the private sector financiers for the rehabilitation of the country’s three refineries in Kaduna, Port Harcourt and Warri.

Mr. Kachikwu had said last October that government was planning to select, this February, successful bidders from the list of 26 firms that submitted bids to refurbish the four refineries.

“We are almost at a threshold of finalising the process of selection (of bid winners). The successful bidders could be announced by January or February next year,” Mr. Kachikwu said.

On Thursday, Mr. Kachikwu said the overhaul of the refineries would see Nigeria become a net exporter of petroleum products by 2019.

He lamented the lingering fuel scarcity across the country, blaming the inability of government to address the problem on logistics and policy issues.

He spoke in Abuja while addressing reporters on his ministry’s plan to host the Nigerian International Petroleum Summit (NIPS), a new oil and gas conference and exhibition scheduled for next week in Abuja.

To resolve the current fuel supply crisis, which resurfaced in the country in November last year, he said government would need to address certain fundamental policy issues, especially with regards to petrol pricing.

“Behind the scenes, a lot of meetings are taking place, because the fuel queue issue borders on both logistics and policy issues,” he said.

“We will need to address fundamental policy issues to enable it (fuel queues) go away, especially where the pricing is showing differentials between landing and retail prices. What do we need to do to continue to sell at N145?” the minister said.

He noted that President Muhammadu Buhari was committed to keep the price of petrol at the current N145 per litre “because he realises and sympathises with the sufferings of Nigerians.”

Recalling government’s decision to raise fuel price from N86 to N145 per litre in 2016, Mr. Kachikwu said another hike in fuel price was not being contemplated now.

Rather, he said, government needed to carry out a lot of re-engineering in both the Nigerian National Petroleum Corporation, NNPC and most of its parastatals involved in fuel supply and distribution to make them deliver.

Government, he insisted, was not in the mood to effect any pump price adjustment any time soon.

On the forthcoming conference, Mr. Kachikwu said the Secretary General of the Organisation of the Petroleum Exporting Countries, OPEC, Mohammed Barkindo, would lead other global oil and gas industry leaders to participate.

The minister said the summit, patterned after the annual Offshore Technology Conference (OTC) in Houston, Texas, would attract new investments and showcase latest technologies used in upstream, midstream and downstream sector operations to achieve cost management.

The maiden edition of the NIPS scheduled for February 18 and 22 would provide the forum for international oil companies and others to discuss ways to move the Nigerian petroleum sector forward.

On Monday, Vice President Yemi Osinbajo is expected to open the summit organised by the Ministry of Petroleum Resources in collaboration with all its departments and agencies.

8 COMMENTS

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