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| Fuel dispensing |
The Nigerian government
will not increase the pump price of petrol despite a demand that it should do
so, officials have said.
Media
report continues:
The
forum of former Group Managing Directors of the Nigerian National Petroleum
Corporation, NNPC, on Sunday called for the price increase by calling for a
removal of price cap in the pricing template.
A
removal of the price cap would mean that marketers would be free to sell petrol
at their desired price, based on several factors such as the exchange rate and
international crude price. With the Naira exchange rate going down by over 50% to
about ₦412 since the current petrol price was fixed, approving the
recommendation would have meant Nigerians pay more for petrol.
The
Nigerian government through the Petroleum Products Pricing Regulatory Agency,
PPPRA, however, said on Monday that it will not accept the advice.
The
former GMDs had in a 12-point communiqué at the end their meeting with the
incumbent GMD of the NNPC, Maikanti Baru, said the price cap of ₦145 per litre
of petrol was “not congruent with the liberalization policy.”
The
removal of the cap under a liberalized market environment would allow marketers
of petroleum products to sell products at any price to enable them recover
cost.
The
Forum said the current ceiling price of ₦145 per litre did not factor the
current foreign exchange (FOREX) rate and other price components of the pricing
template, like crude oil cost and Nigerian Ports Authority (NPA) charges, which
remain uncapped.
While
stating the government’s response, the acting Executive Secretary of PPPRA,
Sotonye Iyoyo, said the proposal was the personal opinion of the former state
oil chiefs.
“If
it was a recommendation, that is what it is – a personal opinion. I’m not aware
government is planning any fuel price increase. We are in a liberalized market
already,” she said.
The
spokesperson of the NNPC, Garba Deen Mohammed, also described the advice as an
“opinion.”
“The
forum was expressing its opinion, which it is entitled to,” Mr. Mohammed
disclosed. “NNPC is a player in the petroleum industry and has a right to have
its views about the industry. Nobody is bound by the opinion.”
First
line charge
In
the communiqué, the forum also asked the federal government to include funding
of joint venture operations as first line charge to guarantee sustainable oil
and gas production and national reserve growth.
The
industry has, for years, been contending with challenges of dwindling
investments to grow production and national reserves, due to inability of
government to meet its funding obligations to the joint venture regularly.
The
meeting also reviewed issues affecting operations of the oil and gas industry
as well as recommendations to resolve them.
The
issues include the insecurity in the Niger Delta, NNPC’s poor corporate
reputation, poor state of the country’s refineries, current state of petroleum
products supply pricing template, and need to focus attention on the Chad Basin
in the ongoing frontier oil exploration activities in the northern part of the
country.
Other
issues include operations of the National Petroleum Investments Management
Services, NAPIMS; Petroleum Industry Bill, PIB; NNPC’s relationship with its
partners; NNPC’s dwindling revenue base and rising debt profile as well as its
widening pension funding gap.
During
the meeting, Mr. Baru presented the status of NNPC’s finances and the state of
the oil and gas industry, spanning his management’s 12 business focus areas
towards restoring the corporation on the path of growth and profitability.
In
its review of the current state of industry and ways to resolve issues
militating against its progress, the meeting was concerned about declining production
levels and the consequences on the country’s revenue.
On
insecurity, the meeting noted the threat to oil production and damage to the
Niger Delta environment. It said there was need for government and security
agencies to refocus their engagements with the various host communities to
build sustainable partnership toward a lasting solution to the problem.
The
former GMDs urged government to ensure the refineries were refurbished using
the Original Equipment Manufacturers (OEMs), while their operations were
restructured as Incorporated Joint ventures (IJV) modelled after the Nigerian
Liquefied Natural Gas (NLNG), with credible technical and financial partners.
The
meeting also asked the government to ignore the proposal in the draft PIB for
an NNPC investment subsidiary, NAPIMS, to be removed from the state oil firm.
it said that would inhibit its effective function as a national oil company in
comparison with its peers in other countries.
On
its dwindling revenue base, the former GMDs said they were concerned with the
situation and called for particular attention to be focussed on revenue
generating entities – the Nigerian Petroleum Development Company, the retail
arm, and the refineries – to restore its growth and profitability.
Worried
by the high level of NNPC’s debt profile, the former oil chiefs urged its
management to urgently ascertain its true financial status and immediately
decide on the most appropriate capitalization model.
“If the current situation remains unchecked, it could lead to the crippling of the corporation and the nation’s oil & gas sector, the mainstay of the Nigerian economy,” they said.
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