NNPC GMD blames fuel scarcity, hike in diesel price on non functionality of refineries
Group Managing Director of Nigerian National Petroleum Company (NNPC) Limited, Mr Mele Kyari has attributed the current fuel scarcity and hike in the price of diesel to the non functionally of the refineries in the country.
He also said that over 200 illegal facilities were operating in the country which had made matters worse.
Appearing before the House of Representatives Joint Committee on Petroleum Resources (Downstream) investigating the increase in prices of diesel and cooking gas on Tuesday, Kyari also absolved the oil rich communities of complicit with the oil thieves in the Niger Delta.
The GMD also told the House Committee led by Hon. Abdullahi Gaya that unless the oil marketers were allowed to import the product, the situation may persist.
He also stated that the Ukraine and Russia war added pressure on countries to increase supply of petroleum products, adding that the solution was also on the restoration crude oil production.
Kyari also said it was not possible to return the country to the subsidy regime.
He said, “Community members are not the thieves. Absolutely not. Everything we are doing is to incorporate the communities into the process of protecting these assets. The National Assembly in its wisdom also included trust fund for the communities in the Petroleum Industry Act so that they become parts and parcel of the system.
“Criminals in the Niger Delta come from all parts of the country. At these illegal refineries there are people from all works of life there.
“Many of these are completely armed and the community members cannot even report them. They are helpless because if they report them, they will come after them. My suggestion this moment is deliver supply, make sure oil marketers are also able to import, and there’s need to engage the CBN to create more dollars. Once we do this, dollars will be allocated for the import of AGO. The will also dampen the effects of going to buy dollar in the open market. So, you can have cheaper dollar and definitely it will affect the price. Secondly the regulatory institutions, the authority, consumer protection council and NNPC, I suggest we need to sit jointly to see how arbitrage can be managed so that the end user is not completely exploited.
“Today countries are toying with subsidy because prices are so high because they don’t think they can manage inflation associated with it.
Also speaking, the Chief Executive Officer of the board of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NPRA), Mr Farouk Ahmed also advocated for the resuscitation of the refineries to fire up the production level of the petroleum products in the country.
He regretted the present exchange rate, saying it was affecting importation of the product, adding that the war in Ukraine had also not helped the country’s oil sector.
“It is important to stress that the Country has no control over the price of AGO or any other petroleum products at the international market. However, countries all over the world are making various efforts at easing the present global high Crude oil prices on domestic petroleum products prices. The following are recommended initiatives to address the current high prices of AGO and LPG in the country.
“Required amount of Forex for importation of the petroleum products be made available to the genuine importers at CBN official rate. ii. Encourage establishment of more local refineries and LPG processing facilities to meet domestic demands. iii. Increase LPG supply from major domestic producers including NLNG, BRT processing, CNL LPG FSO. Consequent upon the foregoing, an extensive consultation is required amongst key Stakeholders, towards lessening the present tension being generated by the global high oil prices” he said.
Similarly, some oil marketers who made various presentations at the meeting asked for availability of foreign exchange to enable to make imports and bridge the gap in the supply chain.
For instance, the representative of Independent Petroleum Marketers Association of Nigeria (IPMAN) said, “On a short term measure is the Forex, if we are able get forex we will import diesel. A lot of marketers are given forex to import at a government control rate. A lot of diesel will come into the country and we will sell at cheaper price.”
The same was case with the representative of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) who said, “It is what we get and based on the cost we receive it determines what we sell. The solution is that if we are able to get forex at a good rate from CBN, then we will bring in the diesel and the price will also reflect the rate at which we brought in the forex. If we get forex we bring in the product and the price at the pump will reflect the fact we got the forex at a very much lower rate.”
Also the representative of Major Oil Marketers Association of Nigeria (MOMAN) shared the same position.
“I align myself with what the GMD and other marketers said. It is true if we get the forex we can bring the price down”, he said.
In his address earlier, the chairman of the joint committee Chairman, Gaya decried the state of the refineries, saying that they were largely responsible for the high cost and the scarcity of the petroleum products in the country.
According to him, the Committee’s mission was to find last solutions to the problem to alleviate the suffering of Nigerians.