By Adewale Sanyaolu
Despite heavy criticisms trailing the country’s monthly expenditure of N150 billion on fuel subsidy, the Nigerian National Petroleum Corporation (NNPC) has foreclosed immediate plans to suspend the price stabilisation initiative.
Its Group Managing Director, Mallam Mele Kyari, stated this in his presentation at an interactive session by the Joint Senate Committee on the 2022-2024 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) at the National Assembly in Abuja on Wednesday.
Rather, he said the corporation would have to continue with fuel subsidy till 2022 and, as such, has made provisions for it in the 2022 AppropriationBill.
‘‘There is an ongoing process that is engaging members of the organised labour, civil society organisations and many other institutions of government and other critical stakeholders to arrive at a landing on how and when we can exit the subsidy regime to be very precise.
He said the government is not sure that it can conclude the process of exiting the subsidy regime before the end of 2021 or early 2022, hence the provision of fuel subsidy in the 2022 Appropriation.
Stakeholders have faulted the N150 billion spent monthly on fuel subsidy, saying it was illegal because there was no provision for such in the 2021 Budget.
On smuggling, he explained that concerted efforts by NNPC and some federal agencies to combat the menace of smuggling of petroleum products have been largely hampered by existing arbitrage fueled by the prevailing huge price differentials in pump price of petrol in Nigeria and neighbouring countries.
He said with a price difference of over N100 per litre between what is sold in Nigeria and in countries around the nation, it was difficult to cage the activities of petrol smugglers.
The NNPC boss said, though the Corporation is working in concert with other agencies, it has made noticeable progress in combating the menace, the battle was yet to be won.
“As long as there is arbitrage between the price that you sell and what is obtainable elsewhere, you can be sure that it is very difficult to contain the situation,” he said. He emphasised that the activities of smugglers have also made it difficult for the country to determine the actual consumption figures for petrol, noting that the Corporation can only know what was trucked out from loading depots across the country but cannot determine how much of that was consumed in-country.
On the MTEF assumptions, Kyari reiterated a base oil price scenario of $57 per barrel for 2022, $61 per barrel for 2023 and $62 per barrel for 2024 predicated on a base national production of 1.883 million barrels per day in 2022, 2.234 million barrels per day in 2023 and 2.218 million barrels per day in 2024.