Ibe Kachikwu, Minister of State for Petroleum Resources, says the major solution to the perennial fuel scarcity challenges in the country is for Nigeria to fix its refineries.
Kachikwu gave the recommendation on Thursday during a public hearing convened by the joint Senate and House Committee to investigate the fuel scarcity that hit the nation in the last few weeks.
He presented three modules as option to guarantee seamless supply and distribution of petroleum products across the country within an 18-month corridor, ahead of the eventual attainment of local refining capacity
Kachikwu explained that it was imperative to explore options which would open up the market and allow oil marketers to import petroleum products and complement the ongoing efforts by the NNPC to sustain the sanitization of the products supply and distribution matrix.
The Minister listed some of the measures that may paved the way to marketers’ participation in the fuel import regime to include: flexible tax-wave window to accommodate extraneous cost elements, an exchange rate modulation programme and price plurality regime which could allow the marketers sell at a price different from the NNPC’s.
He said the 18-months emergency window would be boosted with a quick revamp and effective use of the nation’s pipeline infrastructure, saying pipeline remains the most reliable means of transporting petroleum products.
He however stated that ultimately what the country needed is to have its refineries working, noting that it makes better business sense to add value to crude oil than sell the commodity raw.
Meanwhile, Kachikwu hinted that landing cost for petrol stood at N171 per litre.
According to him, the Federal Government, through the NNPC has been bearing the cost of N26 per litre, representing the difference between N171 and the current official price of N145 per litre.
Insisting that independent marketers would not be able to import the product at the current foreign exchange rate, he said the marketers were able to sell at N145 per litre when the exchange rate was N285 per Dollar. The naira presently exchanges for N365 per Dollar.
“We now have to go back and find the solution to this problem in order to ease supply gaps and ensure availability of the product at all times,” the Minister said.
He stated that the marketers stopped importing fuel since October 2017, as a result of their inability to access foreign exchange from the CBN, leaving only the NNPC to import the product, which has left a wide gap between demand and supply.
Also in his presentation before the Joint NASS Committee on the Fuel Situation, Maikanti Baru, Group Managing Director of the NNPC, said the corporation had made arrangements to import additional Cargoes of Premium Motor Spirit (PMS) between January and March 2018, with a view to keeping the Country wet, in addition to ensuring a beef-up of the nation’s strategic reserves.
The NNPC GMD explained that the expected cargoes would also help to bridge the identified leakages in the system.
The additional volumes is premised on the prevailing NNPC one-Cargo-per day fuel import arrangement designed to guarantee the daily discharge of over 40 million litres of petrol.
As part of measures to sustain the current fuel supply situation, Dr Baru said in addition to the increased volume of products importation, the corporation is also working in consultation with other stakeholders to increase the throughput arrangement with members of the Independent Petroleum Marketers Association of Nigeria (IPMAN), subject, however, to acceptable guidelines to be reached with the group.
Kabiru Marafa, Chairman of the Joint Senate and House Committees on Petroleum, Downstream, while opening the session, emphasized the need to get to the roots of the hiccups that rocked the supply and distribution recently.
He enjoined the invited stakeholders to limit their deliberations to the challenges, which he said put a lot of strains on the ordinary people in the country while it lasted.