…says N120 billion monthly petrol subsidy bill unsustainable
The Nigerian National Petroleum Corporation (NNPC) has disclosed that bearing the N120 billion subsidies on petroleum products has become a burden too heavy for the Federal government.
The Group Managing Director (GMD), Mele Kyari during a press briefing revealed that the federal government is already in talks with the organized labour on how to cushion the effects of the deregulation of the oil sector so that market forces would be allowed to determine prices of petroleum products.
He said that NNPC currently subsidizes cost of Premium Motor Spirit (PMS) with about N120 billion ($263,248 million) monthly.
Kyari explained that the NNPC absorbs the cost differential which is recorded in its financial books, adding that while the actual cost of importation and handling charges amounts to N234 per liter, the government is selling at N162 per liter.
He, however, said that the NNPC can no longer afford to bear the cost and that sooner or later Nigerians would have to pay the actual cost for the commodity.
Kyari, who avoided calling the payment a subsidy, said the NNPC pays between N100-120 billion a month to keep the pump price at the current levels, insisting that market forces must be allowed to determine the pump price of petrol in the country.
Speaking on the 10 percent profit share demand of oil producing host communities, the GMD said that in the last 20 years, the communities have been agitating for 10 per cent of profits from operating companies without putting into consideration what happens when a company decides to declare loss at the end of the day.
He said the government decided on two and half percent, explaining, “What we did was to zero down the percentage of operational expenditure. If you look at the companies operating in this country, operational expenditure is huge that is why we said two and half percent will be good.”
The Minister of State for Petroleum, Timipre Sylva, who avoided answering questions on the agitation from the host communities because he is from the Niger Delta region, however said that the draft bill on Petroleum Industrial Bill, PIB, which would address the agitation on the percentage share was already with the National Assembly.
He said that the lawmakers may decide to adjust the percentage as submitted for the host communities.
“Whatever needs to be done, will be done at the National Assembly, the draft bill is before them,” the Minister said