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Subsidy is a fraud,
he asserts
The Federal Government plans to reduce the pump price of the Premium Motor Spirit (PMS) otherwise known as petrol to N85
per litre, according to the Minister of state for Petroleum, Di. Emmanuel Ibe Kachikwu.
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| Dr. Kachikwu |
The Minister told journalists in the Port Harcourt
Refinery Company (PHRC), where he spent Christmas inspecting the plant.
Asked when the Federal Government
will release the new price template of the Petroleum Product Pricing Regulation
Agency (PPPRA), he said that he approved the new price for the agency on
Thursday.
Pressed to reveal when the new price
will become effective, Kachikwu, who is also the Group Managing Director of the
Nigerian National Petroleum Corporation (NNPC) said: “Like I said, we have done
a modulation calculation and it is showing us below N87. I imagine that if
PPPRA publishes it today, it will become effective immediately. But the 1st of
January that is when we are looking at.”
According to him, the new price is
below the current N87 per litre and it would now convince Nigerians that the
pricing modulation that the Federal Government promised to embark on a
few days ago was not a trick.
He noted that following government’s
analysis and research, it has been realized that the country can fluctuate the
fuel market in accordance with the crude oil market fundamentals.
Justifying government’s reasons for
scrapping the Petroleum Support Fund otherwise known as oil subsidy, Kachikwu
explained that government can no longer afford to subsidize the product
following the fraud that has attended its operation.
He added that it has become clear
that government earnings are dipping on daily basis.
He said: “It is out I signed off on
it yesterday (Thursday). I imagined that in the next couple of days the
marketers would get advice on that. The nice thing about the PPPRA, where I
signed up on it yesterday is that the price will be far below N87.
So for the first time people will
understand that the pricing modulation I was talking about is not a gimmick. It
is for real. We have gone to find out how we will be able fluctuate this market
to reflect what the reality of crude market is. The objective is that
one, we cannot afford to continue to subsidize .
We can’t even understand where those
subsidies were going to. There is a lot of fraud elements in it so we need to
cut that of.
The second is the earning
capacity of the Federal Government is deteriorating by the day with lower
prices of crude and come out more.”
He submitted that from the
application market realities for the pricing modulation, government has
discoverd that petrol would sell for either N85 or N86 per litre.
The minister recalled that it was
from this axiom that President Muhammadu Buhari announced that the price of
petrol remains N87 at the moment.
Kachikwu said: “But in applying that
where we landed when we did the analysis for the very first time was about N85
or N86 so it is below N87.
And maybe the first price that will
come will reflect it. That was why Mr. President said that prices will be N87
for now. And that is what we have in mind.”
On the security of the pipelines, he
said that government had tried stopping the menace with military
intervention to no avail before it engaged some private contractors
who had worked with the majors for the crude pipeline management.
According to him, the private
contractors have taken over Atlas Cove, Mosimi and they would be
extending the surveillance to Ilorin between yesterday and today.
They will also look at the Port
Harcourt and Aba axis, he stressed.
The minister said that government is
now beginning to have a clue of how to tackle pipeline insecurity, adding that
it is far more expensive to convey petroleum and products through pipelines
than trucking them by road.
He said from the briefing he got from
the inspection of the refineries , they are close to re-opening.
“In the next one week, we are ready
to see products out of here”, he disclosed.
Kachikwu said that a lot of the
rehabilitation of the refinery was being done with intensive manual labour of
the staff since paucity of fund affected the holistic change that is required
in the factory.
He said that the refinery is now aging
so one fault comes up after the other even after repair but that would stop
when government repairs the plant holistically early next year.
According to him, about 5.5million
litres daily of PMS is expected from the refinery in the next few days. Other
products to come from the plants, said Kachikwu “are AGO, Kero and others.
Where we love to be is to have half of the consumption of this country at the
refineries at the minimum, which is about 20million litres. But where we are
with the sleepless night I have had in the last few weeks any molecule is
significant.
Kaduna will still be doing
2.3million. Let’s start from there. And that is doing 60 per cent performance.
This is still an assumption. I will like to see them getting closer to 80 or
90. By the time they time they do that we will be getting 11 to 12million
litres out of this place.”
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