The Nigeria National Petroleum Company (NNPC) Limited has said the decision to remove the subsidy on Premium Motor Spirit (PMS) by the President is a welcome development.
The statement was made by the Group Chief Executive Officer (GCEO) of the NNPC, Mr. Mele Kyari during a press briefing shortly after the pronouncement by President Bola Tinubu.
Tinubu had in his inaugural speech at the Eagles Square abolished fuel subsidy in Nigeria, saying it is no longer sustainable
He had said, “On fuel subsidy, the budget I met before I assumed office and what I heard is that there is no provision for subsidy. Fuel subsidy is gone.”
Reacting to the development, Kyari said the subsidy burden which has been placed on the NNPC Limited is affecting the company’s cashflow and threatening its sustainability plans due to the federal government’s inability to refund the subsidy claims.
He added that NNPC as a limited liability company cannot continue to bear the burden of subsidy on behalf of the federation if it must deliver dividends to its shareholders and be profitable.
He said, “We welcome the decision of the president to announce the removal of subsidy on PMS and this has been the major challenge for NNPC operations.
“We have been funding subsidy from the cash flow of the NNPC since government is unable to defray the cost of subsidy for the federation. We believe that this will free resources for the NNPC to continue to do the great work that this company is doing for our country and it allows us to continue to function as a commercial entity.”
Kyari assured that the company has over 30 days of PMS storage and supply and appealed to Nigerians not to indulge in panic buying.
He stated further that the company is in discussion with the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to develop a framework of the implementation of the removal of the PMS subsidy as announced by the President.
He further added that the company as the supplier of last resort as mandated by the Petroleum Industry Act (PIA) will continue to ensure availability of PMS and other petroleum products.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) stated that the resurgence of queues in parts of the country is caused by panic buying by Nigerians.
Queues for petrol resurfaced in parts of the country shortly after President Bola Tinubu announced the cancellation of petrol subsidy.
In response to the situation, Mike Osatuyi, national operations controller of IPMAN disclosed that the reflexive action of customers who wanted to stock up on cheap petrol before the price of the product increased was to blame for the unprecedented level of queues.
“The queue has to do with the announcement made by the president. People want to refill their tanks so that they can buy it at a good price before the price increases,” he said.
“Now that subsidy has gone, it has gone for life. And now, there is fairness for Nigeria as a country. Some marketers are the beneficiaries of the subsidy, including smugglers.
“But as the president has said, whatever the gain on the subsidy is, it will be used for infrastructure. Now that they (the new administration) want to have a unified foreign exchange, everyone can buy and import on the same platform.
“Nobody will buy yam and give me small for just one percent and take 90 percent and say he is doing business. That is where we are.”
When asked about the product’s availability, Osatuyi said there is currently enough stock to supply the nation, but that there would be a price increase.
“No, there would not be scarcity, but the problem is that there is going to be an increase in price,” he said.
However, he said the removal of the subsidy will benefit the general public and result in the improvement of infrastructure and the building of good roads.
When asked what price the product is likely to rise to, he said: “It is going to be determined by market forces, and then it has to do with the exchange rate and the crude price. That is going to be the determinant of the price.”