NNPC says N145 per litre of fuel not sustainable

The Nigerian National Petroleum Corporation (NNPC) has said it can no longer sustain the sale of petrol at N145 per litre. Recall that Labour last month warned against increment in pump price.

Speaking yesterday, Group General Manager, Crude Oil Marketing of the NNPC, Mele Kyari, said with the current price of foreign exchange, it was no longer feasible selling petrol at N145 per litre.

The NNPC official told newsmen at this year’s Oil Trading and Logistics Expo, holding in Lagos that “We have a very difficult business environment. It is impossible today to import products at the current market price, at current fixed foreign exchange rate.

“There is no way today you can take products to retailers and sell at N145. It is not possible.

“If that is true and I believe that it is, because we all go to the market, why can’t we sell above N145? That is where legislation should come in.

“I also know today that it is impossible for this government to announce tomorrow that petrol is about N150.

“This government cannot sustain it. That is the truth. The people will not accept that figure.

“That is why suppliers are not importing. Today, we are in subsidy regime, absolutely.

“There is no way you bring product today and sell at N145 and get back your money and make profit.

“That is not possible. You can see some marketers saying that fuel is N138.

“It is because they did not import. Somebody has taken the heat off the price.

“Because we (NNPC) have taken the heat and you buy from us, you can afford to go to the market and then put a ridiculous price.

“It is not possible because they did not import it.”

It will be recalled that early September this year that former NNPC Group Managing Directors (GMDs) called for fuel price increase. Business247 news Online reported the story thus:

Suffering of Nigerian masses may soon be heightened as the former Group Managing Directors (GMDs) of the Nigerian National Petroleum Corporation (NNPC), at the weekend, have expressed the fear that the current pump price of N145 per litre was no longer feasible, meaning that there may be an upward review of the price of Premium Motor Spirit, also known as petrol, in due course.

In a statement released at the weekend by the NNPC, the Former Group Managing Directors (GMD) made this position known after one-day meeting with the current GMD of the NNPC, Dr. Maikanti Kacalla Baru and the immediate past GMD and current Minister of State for Petroleum Resources, Mr. Ibe Kachikwu in Abuja.

The former GMDs said the PMS price-cap of N145 per litre was not congruent with the liberalization policy especially with the foreign exchange rate and other price determining components such as crude cost, Nigerian Ports Authority (NPA) charges, among others, remaining uncapped.

They commended the NNPC for resolving the fuel supply crisis and urged the Corporation to put measures in place that would ensure sustenance of seamless supply of petroleum products nationwide.

The body also said that the country’s refineries  should be rejuvenated using the Original Equipment Manufacturers (OEMs) and that the refineries should be restructured to operate as an Incorporated Joint venture (IJV) similar to the Nigerian Liquefied Natural Gas (NLNG) model with credible partners having requisite technical and financial capabilities.

They called on the current management of the NNPC to immediately established the true financial status of the Corporation and also decide on the most appropriate way for its capitalization.

They expressed serious concerns about the continued dwindling revenue of the NNPC and advised that the Corporation should pay particular attention to its revenue-generating entities such as the Nigerian Petroleum Development Company (NPDC), NNPC Retail and the refineries in order to return the NNPC to high performance, growth and profitability.‎

They also support the decision of President Muhammadu Buhari in the area of crude oil exploration activities in the frontier basins particularly the ongoing efforts in Chad Basin and the Benue Trough, while they advised Baru to pay priority attention to the Chad Basin where promising prospects are recorded.

In addition, the statement stated: “The former GMDs noted that for effective functioning of any National Oil company (NOC), the technical components of the country’s Exploration & Production (E & P) must be integrated as part of the country’s NOC.

“The current Petroleum Industry Bill (PIB) which proposed the incorporation of NAPIMS and taking it out of the NNPC will inhibit the effective functioning of the NNPC as a National Oil Company (NOC).

“This will make NNPC to operate at a different level compared to its peers in other OPEC Member Countries. While the former GMDs have no issues with incorporation, they strongly advise against taking NAPIMS out of NNPC.”

It would be recalled that it was reported in August that oil marketers had said that the actual or real cost of petrol was N151.87 when all the pricing components are adequately imputed.

They then said they were merely struggling to maintain petrol price at the current price of  N145 per litre because of the stiff competition in the downstream oil sector, stressing that the practice was not sustainable.

Those present at the meeting, according to the NNPC, was ‎the Minister of State for Petroleum/Immediate Past GMD, Dr. Emmanuel Ibe Kachikwu, represented by the Senior Technical Assistant, Engr. Johnson Awoyomi; HRM (Dr.) Edmund Daukoru, Chief Odoliyi Lolomar, Dr. Thomas M. A. John, Engr. Lawrence Amu, Dr. Jackson Gaius-Obaseki, Engr. Funsho Kupolokun, FNSE, Engr. (Dr.) Abubakar Lawal Yar’Adua, Dr. Joseph Thlama Dawha, Maikanti Kacalla Baru.