Fuel Scarcity, Hike In Diesel Price Due To Moribund Refineries – Kyari

Group Managing Director of Nigerian National Petroleum Company Limited (NNPC) Mr Mele Kyari, has attributed the current fuel scarcity and hike in the price of diesel to the non functional nation’s refineries. He also said over 200 illegal facilities were operating in the country to matters worse.

Appearing before the House of Representatives Joint Committee on Petroleum Resources (Downstream) investigating the increase in prices of diesel and cooking gas yesterday, Kyari absolved the oil rich communities of complicit with the oil thieves in the Niger Delta.

The GMD told the House Committee, led by Abdullahi Gaya, that unless the oil marketers were allowed to import the product, the situation might persist.

He noted that the Ukraine and Russia war added pressure on countries to increase supply of petroleum products, adding that the solution was also on the restoration crude oil production.

While noting that it was not possible to return the country to subsidy regime., Kyari said: “Community members are not the thieves. Absolutely not. Everything we are doing is to incorporate the communities into the process of protecting these assets.

‘’The National Assembly, in its wisdom, also included trust fund for the communities in the Petroleum Industry Act, so that they become and parcel of the system. Criminals in the Niger Delta come from all parts of the country. At these illegal refineries, there are people from all walks of life there.

“Many of these are completely armed and the community members cannot even report them. They are helpless because if they report them, they will come after them. My suggestion this moment is deliver supply, make sure oil marketers are also able to import, and there’s need to engage the CBN to create more dollars.

‘’Once we do this, dollars will be allocated for the import of AGO. That will also dampen the effects of going to buy dollar in the open market. So, you can have cheaper dollar and definitely it will affect the price.

‘’Secondly, the regulatory institutions, the authority, consumer protection council and NNPC, I suggest we need to sit jointly to see how arbitrage can be managed so that the end user is not completely exploited.

“Today, countries are toying with subsidy because prices are so high that they don’t think they can manage inflation associated with it.’’

Also speaking, the Chief Executive Officer of the board of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NPRA, Mr Farouk Ahmed, also advocated resuscitation of the refineries to fire up the production level of petroleum products in the country.

He regretted the present exchange rate, saying it was affecting importation of the product. According to him, the war in Ukraine has also not helped the country’s oil sector.

“It is important to stress that the country has no control over the price of AGO or any other petroleum products at the international market.

‘’However, countries all over the world are making various efforts at easing the present global high crude oil prices on domestic petroleum products prices. The following are recommended initiatives to address the current high prices of AGO and LPG in the country.

“Required amount of forex for importation of the petroleum products be made available to the genuine importers at CBN official rate; encourage establishment of more local refineries and LPG processing facilities to meet domestic demands; increase LPG supply from major domestic producers, including NLNG, BRT processing, CNL LPG FSO.

‘’Consequent upon the foregoing, an extensive consultation is required among key stakeholders, towards lessening the present tension being generated by the global high oil prices,” he said.

Similarly, some oil marketers who made presentations at the meeting, asked for availability of foreign exchange to enable them to make imports and bridge the gap in the supply chain.

Representative of Independent Petroleum Marketers Association of Nigeria, IPMAN, said: “On a short term measure is the forex. If we are able get forex, we will import diesel. If a lot of marketers are given forex to import at a government control rate, a lot of diesel will come into the country and we will sell at cheaper price.”

The same was case with the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) which said: “It is what we get and based and the cost we receive determines what we sell.

‘’The solution is that if we are able to get forex at a good rate from CBN, then we will bring in diesel and the price will also reflect the rate we bought forex. If we get forex, we bring in the product and the price at the pump will reflect the fact we got the forex at a much lower rate.”

Also, Major Oil Marketers Association of Nigeria, MOMAN, shared the same position, saying

“we align ourselves with what the GMD and other marketers said. It is true, if we get the forex we can bring the price down.’’

In his earlier address, chairman of the joint committee, Gaya, decried the state of the nation’s refineries, saying they were largely responsible for the high cost and the scarcity of petroleum products in the country.

According to him, the committee’s mission is to find lasting solutions to the problem to alleviate the suffering of Nigerians.