More trouble for Nigeria as petrol cost hits N256, subsidy N150b -says NNPC

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CBN

 

…crude prices may hit $100 per barrel

 

As the Nigeria National Petroleum Corporation NNPC is crying out because of the way the country is bleeding over increase in the landing cost of premium Motor Spirit or petrol, big oil chief executives have joined some oil traders to speculate that the price of crude oil could hit $100 per barrel in no distance future.

This definitely signals clear danger ahead for the Nigerian economy, if it does happen, because most of the refined products which prices are influenced by the crude oil prices are imported into the country.

Apart from this, the exchange rate which is almost N500 to $1 has helped to aggravate the problem.

The Nigerian National Petroleum Corporation (NNPC) said the cost of a litre of petrol has hit N256 and it is absorbing between N140-N150 billion in monthly subsidy to sell to consumers at N162.

The corporation has however blamed the problem on fuel smugglers  who have worsening the situation, as daily consumption jumped to to 103 million litres per day in May, as against the usual 50-60 million litres.

 

Mele Kyari, the Group Managing Director (GMD), NNPC, made this known on Tuesday at stakeholders meeting organised by the corporation to discuss how best to stop smuggling in the country.

 

The NNPC boss said the current situation had kept the country in a state of bleeding, as it could not sustain the payment of subsidy that accompanies the volume.

 

According to him, the introduction of Operation White and involvement of the Economic and Financial Crimes Commission (EFCC) had helped the situation.

 

He explained that from the Petroleum Products  Pricing  Regulatory Agency( PPPRA) of the trucks sent out, it has been noticed that  there  has been some level of collapse of load out, with average move from 70 million litres to 60 million litres just in one month, meaning that the country can do with less than 70 million litres per day.

 

The balance, he stated that they  don’t know  where it goes to but  that they are sure  it is not consumed in this country.

 

He said :“In very recent data, we see what we really want in the beginning of May and June, there was a day we load out about 103 million litres of PMS within one day across the depots. We know it is not required, we know it is inappropriate and we also know that something wrong is happening that somebody is chasing something.”

 

President Muhammadu Buhari he explained had directed that smuggling must stop stating that it was the reason for inviting all stakeholders to chart the way forward.

 

He said that the corporation had incorporated the EFCC, the Department of Security Services (DSS), the Nigeria Customs services (NCS), the Nigeria Security and Civil Defence Corps (NSCDC), on a platform to achieve this.

 

“That is why we are happy to drag in the EFCC, DSS, NSCDC, and even the NCS on a different platforms that will enable us to control this volume and we have seen it work,’’ he added

 

Commenting on the current PMS and subsidy payment, Kyari explained that with the current exchange rate, the pump price of petrol should be N256 per litre.

 

“If we are to sell at the market today at current exchange rate, we will be selling the product at about N256 to a litre. What we sell today is N162, so the difference is at a cost to the nation,’’ he said

 

According to him, with the high volume of daily consumption, the country cannot sustain subsidy payment.

 

“As long as we don’t regulate volume, until we are able to exit this current level, which I know so much work is going on, then we have to manage the volume that we are exposed to between this price of N162 and N256.

 

“The difference comes back to as much as N140 billion to N150 billion cost to the country monthly.

Abdulrheedas Bawa, EFCC Chairman,  said the commission was happy to be part of Operation White since part of its duty was to ensure closure of financial crimes in the country.

 

“It is quite disheartening to see what is happening. In 2012, we were faced with petroleum subsidy fraud, we at the EFCC were able to unravel a lot of fraud going on there.

 

“From volume falsification to alteration of bill of laden, to the non-payment of over recovery and to what I call single importation and double subsidy payment.

 

“We are still trying to recover about N50 billion we have identified in the fraud but now it is a different ball game. NNPC has taken responsibility of importation of products but the issue of smuggling is there.

 

“We are assuring Nigerians that anything we have to do to stop smuggling, we will do to ensure that perpetrators are brought to book and justice is met for the benefits of Nigerians,’’ he added.

 

Meanwhile bosses of some of the world’s biggest oil companies said crude prices are likely to keep rising because a lack of investment will curtail future supply.

The chief executive officers of Royal Dutch Shell Plc and TotalEnergies SE joined major commodity traders and banks in predicting that oil could go as high as $100 a barrel, although they also said volatile markets could drive prices back down again.

The lack of investment is “going to exacerbate supply and demand tightness as the economies pick back up again, and then in time we’ll see supply pick up and rebalance,” Exxon Mobil Corp. CEO Darren Woods said at the Qatar Economic Forum Tuesday. But “in the shorter term probably higher prices” are more likely.

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