N3.4trn Needed to Subsidise 66m Litres Daily Consumption of Petrol Yearly – Kyari
The Group Chief Executive Officer (GCEO) of the Nigerian National Petroleum Company Limited (NNPCL), Mr. Mele Kyari, yesterday disclosed that the sum of N3.4 trillion was required as fuel subsidy for the 66.7 million litre of premium motor spirit (PMS) daily consumption per annuam as against the N4 trillion budgeted.
Kyari made this known during the resumed investigative hearing into the subsidy regime from 2013 to 2021, held by the House of Representatives Ad-hoc Committee chaired by Hon. Ibrahim Mustapha.
The NNPCL GCEO who was represented by the company’s Chief Financial Officer, Mr. Umar Ajia also informed the lawmakers of the company’s resolve to extend the Direct Sales Direct Purchase (DSDP) contract which was billed to end in August, 2022, in order to avert fuel scarcity in December and during the 2023 general elections.
He said, “We have about 1.6 billion litres incoming, land and marine. This is what is the minimum level we have to maintain, especially as we approach winter. Most of the refineries that we procure are actually shutting down their operations because of the clamour for green energy and COP26 compliance.
“Even gas that is transition fuel for us is being given an eight years. Of course, we do not agree. When you look at PMS outlook, we want be closing each and every month with a two billion closing stock. “That is the only way you can sustain petroleum so that the marketer does not see some slack and take advantage by begin to hoard product that can create artificial scarcity which can lead to queue.
“There is a huge arbitrage for anybody to move products outside. We are not saying that the bulk of the product is smuggled. The reality is that there is no study to validate the actual consumption. What we are reporting daily is what the authority, which is the regulator publishes.”
According to him, they are represented at every depot in Nigeria.
“Exchange rate has been moving steadily from N195.5 per dollar to not now N390.6 to a dollar, on average. The shipping cost has doubled, therefore, the landing cost of PMS has moved from N87 per litre in 2015 to about N327.68 per litre today.
“When you compare it to what we are sell, you have a N209 on every litre. When you multiply the N209 per litre with an average of 66.7 million litre, you are talking about N3.4 trillion subsidy for the year. As you recall, in the 2022 appropriation, the national assembly.”
He further said, “The reality today is that if one were to take statistic of the number of vehicles in Nigeria, how many Keke Napep do we have? How many pumping machine, how many pumping machines do we have?
“On a routine visit, I saw nothing less than a million keke, take an average that each one uses four litres every day, that is four million litres, one city. We have not done a study to validate, people are say that how is it that we are evacuating 66 million a day, that is the reality. Some days, what is evacuated can go as much as 100 million a day, while some weekends, we do zero.”
Responding to question on the huge allocation of PMS to states near border towns, the NNPC official who lamented that previous efforts made by PPPRA to install Acquila facility with a view to forestall illegal transportation of PMS across illegal border failed.
He however averred that, “If you have N5 million, you can cross the borders with trucks laden with PMS and that is the bitter truth, we have porous borders; yes, we have Customs.
“PMS crosses everywhere to Cameroon through the north-east, Nigerian PMS gets to Mali; our neighbouring countries hardly import PMS. In fact, some of them do not have the cover to back up imports.
“The marketers are watching. States that consume the most are states like Oyo and Ogun State, they even consume more than Lagos State, so you wonder, is it that they have more vehicle than Lagos? This explains that this are states with porous borders and that will explain why this bulk evacuation is going out of Oyo and Ogun States, probably neighboring countries.”
