The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari has proffered solution to the Fuel Subsidy Dilemma the burden of which the corporation has been shouldering even when it has no budgetary provisions.
Speaking before the Senate Committee on Anticorruption and Financial Crimes during a session to assess the level of implementation of the National Anti-corruption strategy 2017-2021 Kyari said, the subsidy is no longer sustainable.
He therefore sought the support of the National Assembly on complete deregulation of Premium Motor Spirit.
“The issue needs the help of not just this committee but that of the entire National Assembly to achieve results to ensure that the pricing of Premium Motor Spirit is not regulated and have a framework that protects Nigerians from exploitation.
“We know for sure the way to resolve issue of subsidy is to make sure that PMS is fully deregulated. It is a policy issue which I am also aware that the National Assembly is involved in some of these engagements to make sure that we have a lasting exit.
“That is the sure solution to the subsidy dilemma. What is happening today is that NNPC buys this product at a price which is very far from the N162. We practically discount and sell to oil marketing company because we are not able to shift from the current price to the market price.
“Until that engagement which must involve all of us, including the National Assembly. Once that is completed we would have no issues around it.”
“You are aware that in the 2020 and 2021 appropriation act there is no provision for subsidy in the appropriation act.
“In 2020 Something terrible happened to the industry it is called COVID-19. COVID-19 threw a big challenge in the oil industry. The end result is prices collapsed to extremely low level. That countries were not coming for crude oil.
“The reaction of the producer community is to bring down that production because the demand was not there so that when the prices normalise we can go. We became part of that relationship As a country that was the best decision at the time.
“The end result was that because prices were low that time we also went ahead to reduce the prices that Nigerians were paying for PMS but because of the pair revenue issue that the COVID-19 created, in the reversed legislative appropriation act we suggested that there should be no provision for subsidy.
“First we had to exit the pre regulation of PMS and secondly we don’t just have resources anymore. “That picture did not change until September 2020 when the prices rebound to where you are not l sell PMS at the price of N145 before COVID-19.
He said the ENDSARS protest also made it impossible to increase prices as at the time because there was practical uprising to any changes in fuel prices so there were engagements with the organized Labour and other groups.
He said the corporation has made a major breakthrough as it is now buying the product at a price that is very low making it possible to save $1b for the country every year
“What we have taken care of today is that we are buying this product in a price that you have never seen.
“Before this Government there is what we call premium in this business which is the value you add to the published price of Petroleum product where you buy.
“The difference between what we are doing today and what was done in the past is that we are saving $1b of cost every year.
“This is monumental, this is very fundamental what it means is that we are not paying $1 more than it is required. That is why we are very proud to publish all the records you see on our website.
“We will ensure that we control the pricing before the full deregulation in the price of PMS.”