…says ‘N120bn monthly subsidy no longer sustainable’
. Labour threatens mass action
Federal Government says the N120 billion expended monthly on subsidising petrol for Nigerians is no longer sustainable.
Group Managing Director of Nigerian National Petroleum Corporation, Mele Kyari, who stated this on Thursday, raised the alarm that petrol is currently being subsidised every month at between N100 billion and N120 billion.
Kyari spoke while answering questions from State House correspondents during the fifth edition of the Special Ministerial Briefings coordinated by the Presidential Communication Team.
The NNPC boss said the cost of importation and handling charges of petrol now amounts to N234 per litre.
Kyari, therefore, said the NNPC could no longer bear the burden of selling fuel at the current price of N162 per litre.
He spoke after Minister of State for Petroleum Resources, Timipre Sylva, had briefed the State House Correspondents on efforts so far made on the passage of the Petroleum Industry Bill.
Kyari, who said NNPC currently absorbs the cost differential which is recorded in its financial books, disclosed that while the actual cost of importation and handling charges amounts to N234 per litre, has continued to sell at N162 per litre.
He, however, said market forces must be allowed to determine the pump price of petrol in Nigeria.
But Kyari did not give any hint on when the new fuel price regime will commence.
He stated that government was being considerate of the actual impact of the fuel price increase on Nigerians.
According to him, “Our current consumption is about N600 million litres per day; we are selling at N162 per litre and the current market price is N234; actual market price today.
“The difference between the two multiplied by 60 million times 30 will give you per month.
“I don’t have the numbers now, this is simple arithmetic we can do; but if you want the exact figures from our books, I do not have it this moment, but it is anywhere between N100 billion to N120 billion per month. I don’t have the exact number.
“Today, NNPC is the sole importer of fuel. We are importing at market price and we are selling at N162. Looking at the current price situation, the market price could have been between N211 to around N234 per litre.
“The meaning of this is that the consumers are not paying for the full value of the PMS (petrol) that we are consuming and therefore the NNPC is bearing 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 continued and the objective of the engagement is actually not to prevent the implementation, but to make sure there is sufficient framework on the ground to ensure that consumers pay the actual price of this product and that they are not exploited.
“Secondly, (it is) to also put some relief such that the potential effects of the fuel price increase are not transferred to the ordinary people. Part of this is to deepen the auto-gas programme.
“With the auto-gas programme, we will be able to deliver alternative fuel for vehicles, including Keke Napep, so that the price per litre equivalent will probably be half of the PMS at its current price.”
Kyari also said petrol remained cheapest in Nigeria as it sells above N200 across Nigerian borders while in some other places it’s about N500 per litre.
Kyari said, “In some countries, the Nigerian fuel is their territory’s 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 is 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; the government is concerned about the natural impact of price increase on our transportation and other consumer aspects of our society.”
Meanwhile, Organised Labour has enjoined Nigerians to join forces with the Nigeria Labour Congress, Trade Union Congress and all its affiliates for mass action if government increases the current pump price of N162 further.
NLC President, Ayuba Wabba, stressed that Nigerians can no longer bear any increase in fuel pump price with the geometric increase in unemployment and inflation rates.
Wana said in an interview, “At this point in time, Nigerians cannot accommodate any price increase or fluctuation because already, many Nigerians have been impoverished occasioned by COVID-19 and economic downturn. We just came out of recession.
“Importantly, we have seen the statistics on unemployment and inflation. It means those statistics will be doubled if we go in that direction.
“The primary purpose of government is to continue to make sure that citizens don’t suffer the consequences of what they have not bargained for.
“As we speak, with the increment in tariff, energy is still being subsidized. We have shared that document very widely – a commission report by the NLC.”
On labour’s next line of action if the government eventually raises fuel pump price, Wabba said, “Our position is very clear, once that happens, certainly we are going to consult our people to know the next line of action.
“Once it reaches the level of going for a showdown, we will consult our organs and roll out what we need to engage them on.
“Nigerians should also come out and join labour to resist it. We, the labour leaders are part of Nigerian society.”
.