Uche Usim and Adewale Sanyaolu, Abuja
The Nigerian National Petroleum Corporation (NNPC), on Wednesday reiterated that the $3.6 billion foreign exchange buffer provided by the Central Bank of Nigeria (CBN) at the peak of forex crisis in 2017 has helped oil marketers remain in the business of importation of products.
Speaking at the ongoing Nigerian Oil and Gas Conference and Exhibition, Chief Operating Officer, downstream of the NNPC, Mr. Henry Ikem-Obih, hurriedly rebutted claims that poor access to foreign exchange was a major factor hindering oil marketers from importing petroleum products.
Ikem-Obih noted that the foreign exchange intervention fund rolled out by the CBN and managed by the NNPC, recorded applications for $7.2 billion worth of foreign exchange, noting that about half of the applications received funding.
The scheme was introduced by the Federal Government in 2017 to provide easy access to foreign exchange for fuel imports. It was a child of necessity birthed to cushion the effects of the free fall of the naira against major international currencies, especially the dollar.
The naira dropped to about N500 to the dollar during the period.
Ikem-Obih added that all applications for foreign exchange for the importation of premium motor spirit, PMS, also known as petrol, through the intervention scheme got funding, while the scheme helped the country to save $1.7 billion.
He said, “On access to foreign exchange, FX, I think the truth is that the forex intervention scheme which was rolled out by CBN and co- managed by the NNPC has been extremely successful.
“Since that scheme was set up, we have received applications from marketers for $7.2 billion worth of FX. And the estimated savings from that whole exercise is $1.7 billion because of the difference in the way the CBN managed the scheme themselves and brought in NNPC, which also brought market knowledge and that was why we were able to potentially save that much.
“In terms of actual disbursement, about 50 per cent of the applications got funding. But the truth is that the FX that came through that scheme especially for PMS got potential funding for majority of the applicants and FX was available to the marketers. However, applications that came in for Automotive Gasoline Oil, AGO, Household Kerosene, HHK, Aviation Turbine Kerosene, ATK also got forex at 305 to a dollar.”
He insisted that the biggest challenge to oil marketers was not access to foreign exchange, but the pump price of petrol, due to the delay in the deregulation of the downstream sector of the petroleum industry.
Ikem-Obih further warned that Nigeria would witness another fuel crisis of unimaginable proportion, if efforts are not immediately directed at ramping up investments in downstream infrastructure to match the country’s growing population and expected increase in demand for petrol.
He said, “I think the danger we have today is marketers sitting and complaining that ‘the market is not deregulated; margins are not enough and so we are not investing.’ But the demand for fuel is growing, population as well, and nobody is investing in infrastructure. We will do all we can within NNPC to be at the fore and make life easy for Nigerians.
“The truth is that the scarcity that we saw a few years ago, and will felt very bad as consumers, will be child’s play in the next few years if we do not start today to invest today, build infrastructure that will grow along.
“Recent United Nations reports estimated populations growth of about 200 million people. Where are the assets, service stations, distribution networks, infrastructure supports that can hold growth.
“One of the things that we are proud of is the pipelines and putting them to function. This is because there is no way we can continue to live with this kind of daily demands of trucks on the roads as we have over 30,000 trucks plying the roads daily. It just makes the distribution network vulnerable and the work in meeting the Nigerian demand an extremely complicated one.”
He explained that the challenge for business is to get innovative, especially as more investment is needed.
“The challenge for you is to do a backward review of what kind of business model you need to still deliver profit from the margin at the pump and that is the challenges for businesses, because when deregulation comes the small player will not survive,” he warned.
Ikem-Obih added that fuel smuggling across the country’s borders to neighboring countries was reducing due to measures put in place by the corporation in collaboration with security agencies.