From Juliana Taiwo-Obalonye, Abuja
The Federal Government has said that the price of cooking gas like crude oil price was being determined by global markets hence it has no control over.
It has however assured that efforts were being made to reduce the price to bearable level for Nigerians before Yuletide season.
The Minister of State for Petroleum Resources, Timipre Sylva disclosed this to State House Correspondents at the Presidential Villa, Abuja, after a meeting with President Muhammadu Buhari, where he formally presented the CEO, Nigerian Midstream and Downstream Petroleum Regulatory Authority, (NMDPRA), Faruk Ahmed and the CEO, Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe.
According to Sylva, the President was equally concerned about the rising price of cooking gas.
Asked what was responsible for the hike in the price of cooking gas and what government was doing to address the situation, Sylva said that the government has no control over the price increase hence cannot subsidize the product as it was fully deregulated
He said, “We must understand that cooking gas is not subsidized. It is already a deregulated commodity. So the price of cooking gas is not determined by government or by everybody in the industry. In fact, gas prices are determined internationally.
“And you all are aware that in Europe, today, gas prices have gone up, there was even crisis in Europe relating to gas prices. So the pricing of gas internationally now affects also the price of gas in the country.
“Apart from that, there are some issues around VAT charges on imported gas, and of course, taxes on imported gas, which we are handling. But of course, quite frankly, these taxes on imported gas, you must also juxtapose it side by side with the local producers of gas.
“So if you incentivize the importance too much, then you will also kill the local industry. And also, you don’t want to incentivize the local industry at the expense of the imports, because if incentivize the local industry at the expense of the imports, then you will not have enough gas produced within the country.
“So, these are the issues of balancing that the midstream and downstream regulatory authority are handling and I want to assure you that we are quite concerned. Mr. President also is very concerned. He is aware that the price of gas is high in the market, and we’re doing everything trying to see how we can bring down the price of gas especially as we approached the yuletide.”
President Buhari has also directed the Minister of State for Petroleum Resources, to proceed to Nembe, Bayelsa state to investigate the level of damage by the recent oil spillage in the area.
Asked what the Government was doing to tackle the oil spillage in Nembe, Bayelsa state and respond to their demands In relief materials, Sylva said that President Buhari has directed that he should visit the community on Wednesday to assess the situation.
Recall that Aiteo, an indigenous oil firm which acquired the Oil Mining Lease, OML, 29 following the 2015 divestment by Shell, maintained that the leak was caused by sabotage by oil thieves who have become an obstacle to oil production and export from the asset.
The minister in his response said, “And the question which is on the spillage in OML 29, we are quite aware of it. Unfortunately, it has happened. It is also one of the issues I discussed with the president as minister and he has actually asked us to go and visit the site to assess the situation and report back.
“Definitely, we are quite concerned with what is happening in Nembe and will be going there very soon, tomorrow in fact, to go and look at what is happening and report back.
“Mr. President is personally very interested and we have discussed it and he said we should go there and come back and report to him because environmental degradation issues are things that we are not going to condone but of course we’ll work with the operators of OML 29 to ensure that this spillage is brought under control as quickly as possible.”
Speaking on why they were at the State House, he said, “As you are all aware that Mr. President is also the Minister of Petroleum and, as it’s characteristic of Mr. President, he did not even see the people he appointed before he approved the appointment.
“He appointed them based on their documentation and the competence that he saw in their credentials that were submitted. So after the appointments, of course, you know, that the PIA is in force now. And the agencies that have been created by the EPA are not functional, Upstream Petroleum Regulatory Commission, and the Mid and Downstream Petroleum Regulatory Authority, they are fully functional, their Chief Executives and some of the executive directors are in place.
“So, I had to bring the Chief Executive of these two agencies to Mr. President, so that at least he can see them for the very first time so that on occasions as Minister, when he meets them, he will recognize them.
“That is why we came and of course, they used the opportunity also, to tell Mr. President, their programmes for their agencies, and got Mr. President’s share from them. And that’s all we came to see Mr. President for today.
“Well, you know, the petroleum industry is being regulated by them. So, of course, the viability of this industry squarely rests on their shoulders.
On what was responsible for the resurfacing of queues in filling stations, the CEO of the Midstream and Downstream Petroleum Regulatory Authority, Ahmed said, “You see intermittent queues in some parts, maybe of Abuja and maybe the environs. Basically, what happened is that some of the depot owners are selling PMS, above the official ex-depot price of N148, they are selling at N156, N157.
“And the reason they adduced is that they are paying for their logistics like shipping in US dollars, they’re paying for NPH, port charges and NIMASA charges in US dollars.
“They have to go to black market to source these US dollars. And that differential between the official and the black market they buy that is why they added about N9 to N10 to N15 and it depends on whether you are in Lagos, Calabar, Port Harcourt, or Oghara.
“Now we had a meeting the week before last on Tuesday, the ninth, and the NPA was there represented and the DG NIMASA was there as well NNPC, major marketers were all there and we all agreed and resolved that NNPC excess capacity of their shipping their vessels will be chartered to all marketing companies will be charging in Naira so that NNPC now will go and source for converting US dollars through the CBN.
“As for the NIMASA and NPA charges, it was all agreed that they will revert to their supervising ministry to get direction on the receipt of these charges in Naira rather than US dollars and I understand the process of that engagement with their supervising ministry has already commenced.
“The NNPC from the 15th of this month have already converted to charging naira instead of dollar for their excess capacity charter to all marketing companies. So I believe with this there will be no reason for the depot owners to increase their price beyond the official selling price of N148 naira.
“Now, we have been working tirelessly in the past few years, to sensitize our people to start using LPG for example. And they were making an effort to do so. And the production at that time was more like titling so, people are now interested in are working towards utilization of LPG, but then the production is not commensurate with the demand.
“And this is why we want to focus on investment in the area. Now a lot of major oil companies like their IOCs want to invest, but the pricing framework is an issue for them. So we’re working with the guidance of the Honourable Minister of State for Petroleum Resources to ensure that we’ll put the pricing framework that is attractive enough for the investors but at the same time is simple enough for the consumers, whether it is power, or industrial base, or the commercial sectors.”
Also speaking, the CEO of NUPRC, Komolaf said, “the full implementation of the Petroleum Industry Act has commenced by our appointment. And indeed, We have resumed in the office. Like for the Nigeria Upstream Petroleum Regulatory Commission, which I am the Chief Executive, I’ve been in office in the past 30 days. And in the process, we’ll be able to come up with six point agenda in line with prescriptions of the way the Act, with which we intend to transform and add value to the Nigeria upstream activities in a manner that we can optimize value across the value chain of the Nigerian upstream activities.
“Among these, is we intend to basically work towards enhancing our daily production, which at the moment, hovers around 1.6 million barrels a day, in fact, that is the data as of today. So, we intend to actually optimize that and that is put measures in place to do that in alignment with the IOCs and producers.
“We equally intend to put measures in place. We are actually initiating Public Private Partnership Initiative, which we tend to use to curb the issue of prospect which is acting negatively on financial revenue. We intend equally to ensure full digitization of the upstream activities in a manner that the nation will have advantage of monitoring on realtime basis that is the activities of the upstream.
“And in addition as part of the agenda we intend to unfold, we are very conscious of the threat to investment in the upstream that is by the fact that when energy transition regime begins, as a matter of fact, we are the regulator in energy transition period, so, we tend to operate in a manner that will facilitate and enable investment in the industry in a manner that will mitigate the effects because we are conscious of the fact that there will be effects of that energy transition and part of the effect that has already been noticeable is funding challenges.
“So, we put in place strategic plans to mitigate the expected challenges of energy transition. So, by and large, this is the agenda we have put in place for us to optimize value for the nation in the upstream industry.”
On his part, the CEO of Downstream, Ahmed, said, “When I took over, there were only two areas upstream and downstream. But with the coming of the PIA, we are now emphasizing the importance of the midstream. Our midstream and downstream which we cover, will require us to open up investments especially in the gas sector, because we have abundance of gas in this country but it has never been harnessed.
“So, we need to encourage investment in the area. So, our main focus here in terms of the midstream is to open up for investors to come and invest in the gas infrastructure and gas production, of course, in collaboration with the upstream commission.
“Now, we have been working tirelessly in the past few years, to sensitize our people to start using LPG for example. And they were making an effort to do so…people are now interested in working towards utilization of LPG, but then the production is not commensurate with the demand.
“And this is why we want to focus on investment in the area. Now a lot of major oil company like their IOCs want to invest, but the pricing framework is an issue for them. So we’re working with the guidance of the Honourable Minister of State for Petroleum Resources to ensure that we’ll put the pricing framework that is attractive enough for the investors but at the same time is simple enough for the consumers, whether it is power, or industrial base, or the commercial sectors. So that is it on the midstream.
“So a lot of work needs to be done there and good enough we have already made provision for infrastructure funds. That means that we are placing a lot of importance to that sector. As far as the downstream is concerned, the key enablers, is to make regulations that will guide the way we conduct our businesses, especially with so many extremes in the downstream in the sector.
“Now, what comes to the mind of most Nigerians is availability of gasoline or PMS or petthe role. Yes. We have been wo ing with NNPC, that’s a supplier of Given to ensure the availability of petroleum products, particularly AGO and PMS. Given the demand particularly coming towards the end of the year, Yuletide, where demand is high, people are going back home to celebrate Christmas. So we’re working on that. I know another area of concern in the area of transporters, petroleum utilization funds because they see that PEF has been scrapped.
“So they’re wondering whether the bridging will continue or that their outstanding liabilities, the payments will be paid. Yes, just to reiterate that, yes, we’re going to continue with that provision as well and the payment of the outstanding debts will be processed have to work towards verification to ensure that what you’re paying for is genuine claims.”