In spite of the Thursday blunt denial by the Nigerian National Petroleum Corporation (NNPC) that there was no plan to increase the pump price of Premium Motor Spirit, popularly known as petrol in the country, industry insiders say whosoever will eventually replace Ibe Kachikwu as the new Minister of Petroleum Resources will steer the controversial issue.
NNPC advised motorists and other petroleum products consumers to disregard trending rumour of a planned hike in the pump price of petrol, claiming that the statement of the corporation’s new Group Managing Director, Mele Kolo Kyari, at the National Assembly on Wednesday did not suggest any plan to increase the price of the white product.
Kyari who formerly headed of the corporation’s crude oil marketing division, also doubled as Nigeria’s representative to the Organisation of Petroleum Exporting Countries (OPEC). He replaces Maikanti Baru for what is perceived as the number two policy role in the oil sector.
Oil watch analysts say one of the key issues on Kyari’s agenda as the new NNPC strong man is to tackle the current consumer fuel subsidy regime. The current subsidy programme ensures that the corporation is the sole importer of all fuel products into the country.
Guarded whispers within some circles in the industry have it that Kyari wants to convince President Muhammadu Buhari’s administration and the skeptical Nigerian people to remove the subsidy regime which is something previous governments have tried and failed to do.
Despite Nigeria’s massive oil potential as Africa’s largest producer, she still lacks significant capacity to refine her own products. Plans are in place to change this amidst the development of the Dangote refinery in Lekki, Lagos State, a private sector project sponsored by the Dangote Group. But this will not come on stream before 2022.
In the interim, NNPC is forced to import refined products through a series of contracts with petroleum suppliers known as Direct Sale Direct Purchase (DSDP) contracts.
Meanwhile, the corporation’s Group General Manager, Group Public Affairs Division, Ndu Ughamadu, had clarified that what Kyari stated during his engagement with the Senate President, Senator Ahmed Lawan, at the National Assembly was that the price of petrol was abysmally low in Nigeria compared to what obtained in the neighbouring West African countries.
Ughamadu noted that his principal had observed at the event that the huge disparity in the pump price of petrol between Nigeria on the one hand and her neighbouring country on the other hand tended to encourage cross-border leakages, as he sought the support of the leadership of the Legislative arm of the Federal Government to curb the malaise of smuggling.
He advised Nigerians from all walks of life to disregard the insinuation of a plan hike in the price of petrol by NNPC, saying statutorily, NNPC was not even in a position to regulate the price of petroleum products, advising that NNPC role as an operator must be differentiated from that of any of the Industry regulators.
The NNPC spokesperson said as directed by relevant agencies of the government, the pump Price of petrol remains N145 per litre, and therefore cautioned petroleum products marketers not to sell petrol above N145 per litre following the disclaimed rumour.
NNPC advised Nigerians to remain vigilant and volunteer information to the Department of Petroleum Resources (DPR), the Industry regulator, or to any law enforcement agency around them, on any station which sells petrol beyond N145 per litre.
But, subsidies are a highly politically sensitive issue and Kyari will have to tread very carefully to push through any changes. For instance, the Goodluck Jonathan administration had tried to do so in 2011 but rescinded the decision due to popular protest.
Informed sources say Kyari’s ability to do away with the subsidies will be highly dependent on who eventually becomes the new Minister of Petroleum Resources, the perceived number one policy role in the oil sector.
This is because the minister will be the one to promote the policy at the ministerial meetings which Kyari is not permitted to attend. However, whether or not Kyari’s ambitions will be met are unknown at the moment.
But, the fact that removing fuel subsidies is on the agenda is a positive outcome in and of itself.
