Minister of State for Petroleum Resources, Ibe Kachikwu, has urged the Federal Government to address the disparity between the landing cost of Premium Motor Spirit (PMS), popularly called petrol and official pump price.
This comes as stakeholders in the downstream subsector of the petroleum industry have called on the National Assembly to urgently pass the Petroleum Industry Governance Bill.
This, they said, would allow for deregulation of the sector and allow more private participation.
Various parts of the country are currently experiencing fuel scarcity, a development that saw many Nigerians spending the Yuletide in filling stations, trying to get fuel.
In his presentation before the Joint Senate and House of Representatives Committees on Petroleum Downstream in Abuja on Thursday, Kachikwu revealed that while the landing cost of petrol stands at N171 per litre, the official pump price is N145 per litre.
According to him, resolving the issue of price disparity in the landing cost and official pump price will allow individuals to import petroleum products.
He proposed three short-term modules to address the pricing issue to include: special provision of exchange rate for importers, tax holiday for pump price variation between fuel stations owned by Nigerian National Petroleum Corporation (NNPC) and private sector owned filling stations as well as enforcement.
He said the Federal Government has scheduled an 18-month emergency period to resolve the problem, during which the Dangote Refinery will be on stream.
The Minister said the long-term solution to perennial fuel scarcity would be to fix the nation’s refineries and building new ones.
He said a committee has already been set up to recommend the appropriate module to adopt.
“During this emergency period, we need to address the issue of pricing. If we are going to sell at N145 per litre, we are going to put mechanisms in place so that the private sector can go back into importation.
“The landing cost of product is about N170 to N171. The price at which we sell today is N145. So there’s a disparity between N171 and N145. What this means is that those individuals who are really there, not with an obligation like NNPC has to meet national supply but with commercial bend, will not bring in products of they are going to sell at a loss.
“We need to free the marketers to do their business. To do their business, we need to address the pricing issue. One model for example is at the time we got the approval of N145, the exchange rate was N285 to $1. Today, it is N305. So even at the minimum, there’s a gap there. One mechanism will be to work with the Central Bank of Nigeria in terms of exchange rate mechanisms.
“Secondly, we are also looking at tax reversion. These individuals pay taxes. Is there a possibility to capture some of the taxes they pay to account for some of the differentials in importation that they would have before they pay their tax?
“We are looking at whether theoretically, you could respect the N145 per litre price and have a plural pricing system so that NNPC and all its stations and affiliates sell at the N145 and at the same time the private marketers see able to bring in product at their own cost and sell.
“There’s been a very lax enforcement on diversion in this country. As long as prices are hovering around N350 per litre on the borders and we are hovering at N145, there is a huge incentive to export product illegally. We have not been able to police our borders properly. Trackers must be placed in every truck that is carrying product in this country.
“You also need to deal with the infrastructural deficit issues. If we cannot repair our pipes at the speed at which we want, we will need to bring in private sector, concession some of these pipelines so that they can repair it and put it to use so that in moments of emergency, we will not go through this kind of problem,” he said.
Also, in his presentation, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Maikanti Baru, disclosed that a total of 4,501 trucks were diverted in the current fuel scarcity.
He identified lack of sufficient reserve, clearance speed, supply gap, diversion, hoarding, panic buying and smuggling as some of the causes of fuel scarcity.
Baru called on the National Assembly to approve outstanding subsidy payments and debts to marketers.
However, Chairman of the Senate Committee on Petroleum Downstream, Kabir Marafa, said there is no such request before the National Assembly.
While Mordecai Ladan, the Director of the Department of Petroleum Resources (DPR) submitted that some filling stations selling above the official pump price have been penalised, the committee ordered that the list be submitted to it by January 16.
The Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN), Obafemi Olawore, insisted that government is still owing its members N800billion, which he said, was outstanding subsidy payment as of March 2016.
He called for total deregulation of the downstream sector and passage of the Petroleum Industry Governance Bill to allow for more private participation.
OWEDE AGBAJILEKE, Abuja
