The Nigeria National Petroleum Company Limited (NNPCL), Mele Kyari, has reacted to reports that the Nigerian government is still paying for the subsidy of premium motor spirit (PMS), also known as petrol as exchange rate worsens.
The Group Chief Executive Officer of the Nigeria National Petroleum Company Limited (NNPCL), Mele Kyari on Monday has dismissed the claims.
It has been reported that the landing price of the Premium Motor Spirit, popularly called petrol, jumped from N651/litre to N720/litre because of the volatility in the exchange rate.
According to oil marketers, if the landing cost was already N720, the pump price should be around N729/litre if the Federal Government had truly stopped subsidising the product.
Kyari’s denial of petrol subsidy removal backtrack comes amid reports that the government has been paying subsidy on petrol so as to keep the pump price from skyrocketing beyond the current average of N620 per litre.
Recall that President Bola Tinubu had on May 29, during his inauguration as President at Eagle Square, Abuja, announced the effective end of the subsidy regime.
However, the removal of fuel subsidy has been trailed by serious economic repercussions, which have led to protests from the organised Labour.
Tinubu had in recent week managed an arrangement with Labour, including the implementation of some palliative measures, including a provisional wage increment.
Oil marketers and a section of organised Labour have recently alleged that the government had restored the subsidy, contrary to its earlier resolve, claiming that with the removal of the subsidy, fuel pump price stability, despite fluctuations, is unexplainable.
However, responding to journalists’ questions at the Presidential Villa, Abuja, after a meeting with President Tinubu, Group Chief Executive Officer (GCEO) of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, said there is no fuel subsidy at all.
He said: “I told you there’s no subsidy whatsoever, we are recovering our full cost from the products that we import. We sell to the market, we understand why the marketers are unable to import. We hope that they do this very quickly and these are some of the interventions the government is doing. There is no subsidy.”
Kyari also blamed the recent fuel scarcity noticed in some states and Abuja over the weekend on a mixture of bad roads, competition among marketers, and foreign exchange challenges.
On the bad roads, he said: “We have seen in very few states pockets of very low queues. This is not unconnected with the road situation as we’re seeing the number of blockades on our roads crossing products from the southern depots into the northern part of the country, and it takes them a much longer time now.
“They have to reroute their trucks around many, many locations for them to be able to reach destinations and that created delays and some supply gaps. But that has been filled and we do not see any of such problems again.”
On the competition among marketers, Kyari said: “Secondly, because of the full deregulation that we have in this sector, marketers are now competing amongst themselves. So, you must have noticed some fuel stations will reduce price by two Naira and three Naira so customers will naturally run to the places where you have that reduction in prices.
“That creates panic, because for those who don’t know why they are doing it, they will think that there’s something wrong happening, or there’s an ominous sign of scarcity and people start queuing up in the fuel stations. Otherwise, there is no challenge. Supply is robust. We have over 1.4 billion litres of product in our hands, both marine and land. Also there are no issues around delivery of those products into the land. So there is no fear, nothing to bother about.”
On the foreign exchange challenges, Kyari said: “We are also happy that the market forces are now playing out and marketers are competing and of course there are a few issues we’re engaging them to resolve alongside other agencies of government and critical issues around access to foreign exchange.
“As you all know, government is doing so much to ensure supply of FX (foreign exchange) into the market. We know that this FX market will stabilize. Current I&E window is around N770.
“And we know that those inputs that are already happening, the inputs of government today will crystallize and also they will come to an equilibrium position in the FX market and this is a dream of this country.
“So, they will have a stable FX market, stable product market where the prices of product will also speak to prices of other commodities. And this is already manifesting and we think this is the economic revolution that this country needs.”
