NNPC loses N900 million daily to sell petrol at N145 – Kachikwu

From left: Permanent Secretary, Ministry of Petroleum Resources, Dr Folasade Yemi-Esan; Minister of State for Petroleum Resources, Dr Ibe Kachukwu; and Group General Manager, NNPC, Mr Maikanti Baru, during the Senate Committee on Petroleum Downstream Sector’s public hearing on fuel scarcity in Nigeria, at the National Assembly in Abuja on Thursday (4/1/18). 0075/4/1/2018/Hogan Bassey/NAN

The Minister of State For Petroleum Resources, Ibe Kachikwu, on Thursday said the Nigerian National Petroleum Corporation, NNPC, has incurred a cumulative loss of N85.5 billion in importing petrol and selling at the current retail price of N145 per litre.

Kachikwu said the price was fixed in the first quarter of 2016, when crude oil was selling for $49 and pointed out that with crude price rising to $67 a barrel, the pump price, may no longer be sustainable.

Mr. Kachickwu made the explanation to the National Assembly joint committee on Petroleum Resources ( Downstream).

According to Mr. Kachikwu, the landing cost of PMS which was N133.28 per litre in 2016, is now N171 per litre, which has resulted into stoppage of importation of the product by independent marketers.

This, he said had made the Nigeria National Petroleum Corporation ( NNPC ) to be the 100 per cent importer of the product.

The minister disclosed further that as a result of the N26 difference per litre between the current landing cost of the product ( N171) and pump price of N145, NNPC which had been singularly importing the product at the volume of 25 million litres per day since October last year, has been incurring a daily loss of about N800-N900million, cumulatively reaching N85.5billion today, in just three months.

According to him, already government has mandated him and along with a committee set up to find ways out of the problem which he said requires emergency of about 18 months before the local refineries are expected to be in good shape.

He said three solutions are being considered.

“One , is for the Central bank of Nigeria (CBN) to allow the marketers access forex at the rate of N204 to a dollar as against the official rate of N305 to keep the pump price of fuel per litre at N145.

” Two , to give room for modulated deregulation where NNPC would be allowed to continue selling at N145 per litre in all its mega stations across the country while the independent marketers should be allowed to sell at whatever price is profitable to them in all their outlets.

” Three, to look at the direction of blanket subsidy for all the importers in bridging the gap which would be like going back to a problem that had earlier been solved “, he said .

He, however, stressed that the final solution to the problem was for the nation to put her refineries in good shape in a way that 80 per cent of local consumption of the product should be provided for locally.

In his submission , the Group Managing Director of NNPC, Maikanti Baru, said the just ended fuel scarcity was caused by combination of factors ranging from diversion of the product from depots by tanker drivers to neighbouring countries where it sold between N300 to N400 per litre to outright hoarding of the product by unscrupulous marketers at home.

According to him, the NNPC had prior to the scarcity, had 1.9 billion litres in reserve, which was emptied as a result of panic buying arising from rumour earlier made on social media about price increase, the one day strike action embarked upon by PENGASSAN, hoarding and diversion by some dubious players in the sector .

On his part, Director General of the Department of Petroleum Resources (DPR) Dantani Ladan, revealed that most of the filling stations in the country were found wanting in hoarding and diversion during the scarcity.

He said some of the stations’ personnel who were involved in storing of the petroleum project had been arrested.

While calling on the general public to contact the agency with any useful information on anyone hoarding fuel, he disclosed that the agency had charged individual marketers to comply with Government pump price.

“For now NNPC is the sole distributor, individual marketers can help and one marketer has been charged 127 million for going against the rules.”

In his closing remarks, the Chairman of the joint committee, Kabiru Marafa, said the various submissions made by all the stakeholders would be looked into.

He called for an urgent solution to resolve the wide gap existing between the current landing cost and the pump price .

(NAN)


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  • yusuf Mikail

    In short, fuel subsidy started since the first quarter of 2016 and the ruling party has been hoarding the information from the Nigerian public. Any subsidy/loss sustained by NNPC is reduction on the amount remit-table to the Federation account.

  • Isyaku Muhammad

    Ok, do something to tackle the problem now

  • smart G

    That’s money well spent. Nothing is too big to spend on the citizens to enjoy fuel at 145. In fact you should spend more.
    Do not expect us as usual to ask you to save it and put it into other things. The ones we endured from N86 to N145 nothing to show

    • M

      Not very smart are you.

  • Abdul

    This people in govt are just hawkish,crooks and not different from the former govt. A sensible govt will remove all taxes associated with importation of fuel and also sell to the refiners at less than international price, this 2 strategy can crash the price to #40 per liter. I don’t know why govt will keep selling fuel at business price to Nigerians given that controlling fuel price can crash inflation by even 50%.

  • emmanuel

    Buhari is a human error. He now uses the PDP government he said was corrupt as bench mark for performance. Unfortunately, he has not achieved 5% of what that government did.
    For those who say Buhari has recovered monies for Nigeria, the last Government recovered much more.
    The last government sent Boko Haram from Abuja, Kano, Kogi, Niger, Zamfara into Sambisa and held them hostage before they left.
    Buhari’s key achievement are: Nepotic appointments, running Nigeria into depression, introducing foolani herdmen killings, introducing suicides, re-defining looting in an unprecedented form, establishing mafiaso into governance and crashing all human development indices in Nigeria

  • Scrutiny

    Finally, the truth is out: nobody is sabotaging the government. All those baying for the blood of the perceived enemies of this administration now know better. This was clearly a market place development, occasioned by the forces of demand and supply. The curious thing is if this was realized in October, why then did they allow things to escalate towards the end of last year? These gaps and inactions on the side of authorities could easily fit into the narrative that there was an underlying intention to browbeat Nigerians into submitting to a fuel price increase- hopefully, not. The truth is that this administration is too scared of taking a pragmatic economic decision in this matter because it (or its elements) had previously trivialized (or politicized) basic economic fundamentals with respect to appropriate pricing and subsidies..

  • olat

    PMB shd wake-up and see d damages CBN, NNPC, Economy team and DSS have caused his government.
    Its possible to sell PMS at 45 naira, have single digit inflation and employed over 3 million in a year
    D Govt can take d following steps
    (1) Set aside 300,000 crude for domestic consumption daily
    (2) Distribute d crude to each states of d federation with oil producing states having larger shares.
    (3) Allow states to give license in setting-up refineries in their domain
    (4) Set a 3 months zero tariff for all refineries machine and equipment, and renewable energy machine.
    (5) Sale crude to state at a quarter of world price
    (6) Buy-back d refined crude (PMS) from states in order to maintain standard and control prices.
    (7) Make its mandatory for NNPC to operate 24 hrs mobile stations.
    (8) Allow export of PMS only when domestic supply is more than demand, and increases export tax on it.
    Its kindergarten economics thinking to justify increases in PMS price in order to curb smuggling. If d inflation rate is very low and d exchange rate is very stable, naira price of PMS will be very expensive for neighbouring countries.

    • Abdul

      Very simple and direct. it is annoying when govt tell us that landing cost for pms is #170 and that they are paying #26 subsidy per liter, the question is how much govt tax is imbedded in the #170? More than #20 i suppose, why not make this fuel import tax free? Again Is it compulsory to sell crude oil at the international market rate to refineries overseas, sell the ones that will be refined and sold back to us at half price and buy back at half price.

  • Comfortkay

    I want to read a positive report that NNPC makes profit, and not all the time that they are losing money. They need to get the correct people there that can do the work.

  • Ogobor Joseph

    But we are supposed to be oil producing nation and should be happy for rising price of crude oil

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  • Dan maikoko

    FUEL PRICE AND NAIRA VALUE
    Dan maikoko
    Over the past two decades, I have made a subtle observation that I jokingly put up as an economic theory. Whenever the price of fuel is raised, the value of the naira drops prompting another fuel price raise which brings down the value of naira even lower and so on. Successive governments have been trapped in this vicious cycle with a few of them taking a hard look at the situation and actually lowering the price of fuel to get out of the cycle. Like magic, the value of the naira appreciates when fuel prices go down and this is why.
    The Nigerian economic situation is not ideal; it resembles that of failed states and countries at war. There is no reliable power supply and transport system. Because of these two deficiencies, all production systems from the smallest to the multinational concerns rely on fuel. It is therefore clear that a few kobo on the price of fuel will reflect a million times across the board from the woman frying akara to Dangote flourmills. The net effect is a rise in prices of goods and services. There are two names for inflation, one is a rise in prices of goods and services and the other is the devaluation of a nation’s currency. Since local production of fuel is still not enough to satisfy local demand, fuel must be imported with the same Naira only this time exchanged for Dollars at the prevailing rate. Because the initial fuel price hike has devalued the naira, the imported fuel will also cost more making it necessary for the government to either absorb the difference or pass it on to the consumers. (This government has actually been subsidizing fuel since the naira value deteriorated which is understandable.)
    When the present government raises the price of fuel to 145 naira a liter, effectively doubling the price, I assumed Buhari knows what he is doing and he cannot be like the rest. I was disappointed when the naira quickly follow suite from 180 to 360 to the dollar. Rumors were rife that it will go even higher. I kept praying for almost two years that we would not face another scarcity, which is usually the barometer of another fuel price hike when the government can no longer absorb the difference in price. To my complete disenchantment I read an article online which claimed that the government has all along been subsidizing the fuel we consume. To complete my devastation, another article is warning Nigerians to prepare for another fuel price hike. To me all the signs are clear and my theory might be true after all. This is not the case of a chicken and an egg, which comes first, this, is a clear case of action and reaction. In the next few months, we will know the truth about the fuel situation.
    I sincerely believe that if the government will solve the power issue, fix the railways and produce our fuel needs locally, the price of fuel will have just as much an influence on our naira as the price of a toothpick. Like all Nigerian problems that need planning and hard work, this is a dream and will likely remain so for some time to come. Given the effort of this government on power, transportation and the refineries there is still hope. However, the way these key infrastructural ingredients are handled so far does not show an understanding of what is at stake. With the modular refining plants, available worldwide one would expect Nigeria to reach its domestic needs of fuel in two years. Yet we are still struggling with the repair of old refineries. The recently awarded Kano-Abuja road is rumored to have a completion period of 9 years! If that is true then Nigerians must prepare for even harder times ahead.

  • esio

    Channel all funds towards exploration of Oil in Lake Chad Basin and other oil and Gas expansion projects to finishing all works in Refining Petroleum products.
    The savings and revenue from sales of Petroleum products complimented with current proceeds normal oil exploration can go into expansion: which will then include Lake Chad, Sokoto and other viable locations.
    Buhari’s priority is just skewed. He can never get it right. Nigerians need to dump him and his non progressive ideology. Following questions screaming for answer:
    1. When did the landing price Change?
    2. Why was it not properly communicated to the appropriate Authorities?
    3. Is NNPC a federation or an Agency of the Federal Republic of Nigeria under the Law of the Land?
    4. How many litres (Tonnes) of PMS has been bought under current scheme, till date?
    5. How much money will be required for bridging for the 2018 fiscal year?
    6. What is the Impact of excluding IPMAN in the importation of of PMS? Positive and negative?
    8. Why have we not completed works on the PH and KD refineries for about 3years?
    9. Any troubling (monkey) hands in the wheel of progress?
    10. What is the estimated cost of expediting the completion and Refinery, both new and retrofitting existing ones. Inclusive of cost benefit analyses?
    11. Where is the Price modulation team as promised by this government as at the date they (Kachikwu) cajoled Nigerians to raise the price of PMS from N87 to N145?
    12. Where are the goodies (deliverables) as promised by Kachikwu, as a result of increase in fuel price?
    Promising of modular Refineries delivery in 2019 is only a political statement: big lie!
    I think NNPC, needs to be purged of the nepotistic recruitment.
    The best brains must be deplored: sorry not in this regime!
    Very sad that NASS is lame duck. Buhari Government is filled with swindlers and coconut heads. Nigeria is doomed!

  • man

    this is really an incompetent govt. when you say you remove subsidy, it means consumers will pay market price. maggots!!!

    and then to fix refineries within 18 months, dangote refinery will be operational by then. kachikwu is speakin with two mouths.