Fuel pump price no longer sustainable – NASS
The Dangote Refinery is coming on stream until 2019 but in the meantime government must find ways to end the present scarcity being experienced by Nigerians and prevent reoccurrences.
To achieve this, however, the general consensus at the just concluded investigative hearing of the National Assembly on the cause of the perennial fuel scarcity was that the approved N145 pump price was no longer sustainable in view of the increase in the landing cost of the commodity.
Senators, members of the House of Representatives, the Minister of State for Petroleum, Dr. Ibe Kachikwu, the GMD of the NNPC, Dr. Maikanti Baru and representatives of the private sectors agreed that for the country to address the lingering fuel scarcity, crude must be refined locally.
Daily Trust on Sunday reports that, stakeholders took turns to proffer solutions to the embarrassing scarcity. The session lasted for about six hours with Kachikwu, Baru and the oil marketers taking most of the bashings from the lawmakers.
Lashing at the stakeholders, Chairman of the senate committee on Petroleum, Senator Kabir Marafa (APC, Zamfara) who chairs the session said there is massive fraud in the country’s Petroleum sector. Specifically, Marafa alleged that the NNPC and the oil marketers defrauded the country of N1.1tr in this year.
“When we asked them (NNPC), they told us, that they are importing 30 cargoes of 37,000MT per month through the DSDP contract. If you compute it at 1, 341 per MT by 37,000, you will have 1.488b monthly. Assuming we consume 40m litres per day, we will have seven days left in each month and if you multiply it by 12 you will have supply of 84 days left,” he said.
To address the situation, the special presidential committee constituted to look into the issue, disclosed that three options are being looked at to address the lingering fuel scarcity
Quoting a document from the CBN, he said the oil marketers got $3.3b dollars at subsidized rate of N305 exchange rate for the importation of petrol into the country.
“The amount should serve us for 189 days at 40m litres per day. In 2017, they are supposed to import 4.2b litres, which is equivalent to supply of 107 days at 40m litres per day. If you take 107 days of the marketers and the excess of 84 days of NNPC, that will give you supply for 191 days at 40m litres per day. In all, we had excess of 7.6b litres which is for 191 days. The cost of it at N141 per litre is about N1.1tr. Who is fooling who? Who is deceiving who? The issue is not about subsidy, there is massive fraud in the sector,” he said.
Based on a document obtained by Daily Trust on Sunday, oil marketers collected a total of $3.075 billion from government to import fuel at the rate of N305 to a dollar between June 29, 2016 and August 21, 2017. The document showed that the actual amount the marketers requested was $3.292bn, but they ended up getting a little less than that.
To address the situation, the special presidential committee constituted to look into the issue, disclosed that three options are being looked at to address the lingering fuel scarcity.
Kachikwu, who chaired the committee, listed the options to include special forex regime, tax concession and deregulation of the market whereby only NNPC petrol stations will sell at N145 per litre while others will sell at a market driven price. Government was ready to play its part by granting pioneer status and duty waivers for the project
Kachikwu got the support of the chairman of the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMA), Mr. Dapo Abiodun who said to maintain the N145 approved pump price, government should make dollar available to them at N240. will be earned from the export of gasoline, diesel, aviation jet fuel and polypropylene,” he said.
Edwin said before the commencement of construction of the project a lot of risk analyses was conducted.
“The original thought was that we had everything we needed in Nigeria, i.e. the crude oil. When we started analysis, we realised that it was highly risky to place all our eggs in one basket, by relying only on Nigerian crude. So, we decided to expand the capability of the refinery to handle oil
Our correspondent reports that even though Marafa barred Kachikwu and Baru from responding to questions on subsidy, it emerged at the hearing that the NNPC is paying a differential of N26 on each litre of petrol sold in the country. The source of funding was however not disclosed as there from different sources. Today, the Dangote Refinery can process a wide range of crudes, such as all the African crudes including that of Algeria, Libya, Angola, Gabon, Equatorial Guinea, etc., the U.S. crudes, Arab Light, etc. Since we are not dependent on Nigerian crude, we are not prone to the risk of the Niger Delta disturbance. We do not use pipelines; rather, we use ships. We use Single Point Mooring Buoys (SPMs) for offloading the crude and loading the products,” he said.
With this projections, Dangote Refinery is already going ahead to plan for a outlets for their products, long before the project is even completed. was no provision for the payment of subsidy in the 2017 budget.
In two weeks’ time, the committee is expected to submit its report to the Senate for resolution to be passed on it. The plenary session of senate resumes on 16th this month.
The Head, Quality Assurance/Quality Compliance, Construction, Dangote Oil Refining Company, Mr. Rama Putta, said “In September 2018, we are going to commission our trading facilities, which consists gantries for filling the trucks, and 35 tanks for storing the fluids will be ready. Every day, 2,600 trucks are going to be filled with petrol, diesel, kerosene, and jet fuel.
“We will buy the products from other countries, because by that time our products will not be ready, and trade them for one year. This is to test our trading facilities. By September 2019, we will sell our own products.”