Mohammed Shosanya
The Nigerian National Petroleum Company, NNPC Limited would have been long bankrupt if the federal government didn’t remove fuel subsidy, the Group Chief Executive Officer of the NNPC Limited,Mallam Mele Kyari has said.
Kyari spoke on Monday while addressing the theme: ‘Petroleum Downstream Deregulation and Gas Utilization’ for a sustainability energy future in Nigeria’, at the opening ceremony of the PENGASSAN Energy and Labour Summit, tagged PEALS 2023, holding in Abuja.
According to him,the law providing for subsidy effectively ended in 2022, but even though the National Assembly made extra budgetary provisions to support till June, nothing was paid forcing NNPC Limited to shoulder the burden single handedly to extent that it was fast heading towards bankruptcy before President Tinubu intervened.
He added:”The law was very clear, that starting from the 17 of February, 2022 there can be no possibility of having subsidy on PMS. And that the market should determine the price, that the state should take every step possible to protect the consumers from the issues come with market price of petroleum products.
“But the last National Assembly in its wisdom made provision for subsidy to Carter from February 2022, to 2023 in the budget, not a single Kobo was paid into into NNPC for the purpose.
“And I can tell that since 2022 when that provision was made until the 29th of May, 2023, not a single Naira was paid to the NNPC Limited as cost of subsidy. That means we were carrying it entirely on the balance sheet of the NNPC”.
“The value of subsidy was seen exceeding N400 billion in a month, the NNPC Limited’s fiscal obligations could not cover subsidy, so we were heading towards what you could technically call the bankruptcy of the NNPC.
“By end of June 2023 we would have been in negative cash flow. NNPC would have been bankrupt if that decision was not taken by the President”.
According to him, even though there was absence of credible data for fuel consumption in the country, evacuation records are well known and the realities is that volume evacuation from the depots declined by 30 per cent as a result of the removal of fuel subsidy.
He noted that subsidy had done nothing but stiffles the growth of the downstream sector of the petroleum industry in the country.
“If there was one thing that stiffles growth of the downstream sector of the petroleum industry it is the existence of subsidy. That is the realities. As at today, there are close to 25 licenses to create refineries, build and operate refineries but nobody could take because as long as you do not have certainty around pricing and crude to pay for that differences no one can take.
“And as long as you have arbitrage, once there is a price differential between one location and another that is substantial, there is no way you can control fraud of all forms. It is impossible. And people will do everything possible to load products between locations. Whatever it is whether it is drugs or petroleum products. People will cut corners as long as market forces determine the price”.
He further disclosed works are underway to ensure that in 2024, Nigeria will become a net exporter of petroleum products.
Comrade Festus Osifo, PENGASSAN President,in his remarks noted that the theme of the (PEALS) 2023 summit: “Petroleum Downstream Deregulation and Gas Utilization for a Sustainable Energy Future in Nigeria” was carefully chosen given the multifaceted challenges and opportunities inherent in the nation’s energy sector vis a vis the global energy demand, to illuminate the path towards a sustainable energy future for Nigeria and by extension Nigerians.
According to Osifo, over the next three days, PENGASSAN will engage in enlightening discussions, sharing nsights, and formulating strategies to address critical issues such as divestment, PMS subsidy removal, and the place/role of the ever-ready Nigeria workers in the oil and gas industry and its concomitant value chains.
“We are witnessing a significant shift in the landscape of the energy sector in the country, marked by the divestment actions of companies such as Mobil Producing Nigeria, Nigeria Agip Company, SPDC, and others, which has impacted the presence of international oil and gas companies in Nigeria”.
The PENGASSAN President said the removal of subsidy and the current state of the nation’s refineries are of paramount importance which are touching the lives of every Nigerians.
