‘Forex policy tweak may hold key to economic growth’

Nigeria’s fuel imports in the second quarter of 2019 ballooned to 7.7 billion litres, as refineries’ woes worsen. Adeola Yusuf reports that cost of petrol imports by the country hit N1 trillion within the period

 

The worth of Premium Motor Spirit (PMS) also known as petrol imported by the Nigerian National Petroleum Corporation (NNPC) skyrocketed to about N1.0098 trillion in three months, as inefficiency of its four refineries cut deep into Nigeria’s oil revenue index.

The National Bureau of Statistics (NBS), which gave this hint in its Petroleum Products Imports and Consumption (Truck Out) Statistics for Second Quarter, 2019 released last Tuesday, announced that a total of 7.74326 billion litres of petroleum products were imported into the country in the second quarter of 2019.

The NNPC, which is the sole importer of petrol, the NBS data showed, imported 5.61 billion litres of petrol into the country from April to June – the three months that made up the second quarter of the year.

Arithmetics of fuel imports

former Minister of State for Petroleum resources, Dr. Ibe Kachikwu, confirmed last April that the landing cost of petrol, which was hitherto set at N133.28 per litre, skyrocketed to N180 per litre due to surge in prices of crude oil, which lasted for three months at the international market.

The landing cost, Kachikwu said, was N35 higher than the pump price of N145 per litre. The NNPC, being the sole importer, caters for the shortfall through under recovery.

With the N180 per litre landing cost for petrol, the corporation imported N1.0098 trillion worth of petrol into the country.

Import according to NBS

The NBS report also added that 1.38 billion litres of Automotive Gas Oil (AGO) also known as diesel were imported during the period.

The NBS statistics also showed that 1.38 billion litres. Other products imported, according to the data, are 12.22 million litres of kerosene and 131.36 million litres of aviation fuel.

The report also indicated that 77.24 million litres of base oil, 41.79 million litres of bitumen and 27.68 million litres of Low Pour Fuel Oil were imported in the period under review.

According to the study, 354.70 million litres of Liquefied Petroleum Gas (LPG) was also imported into the country in the second quarter of the year.

Truck out data

The NBS said that state-wide distribution or truck-out volume for the second quarter showed that 5.18 billion litres of petrol were distributed nationwide.

It said that 1.28 billion litres of diesel, 131.42 million litres of household kerosene, 176.14 million litres of aviation fuel and 157.29 million litres of domestic gas were distributed nationwide during the period.

The data for the report was provided by the Petroleum Products Pricing and Regulatory Agency, verified and validated by the NBS.

Recalling the experience of 2016, when government increased petrol price from N86.5 to N145 after months of severe scarcity, Kachikwu, had described fuel subsidy as an emotive issue.

“You have very positive argument that says, ‘Why is this happening; let’s get it out.’ Once you do it, the streets get flooded by protesters,” he said. “You have five or six or 10 days of no activity in the country. So, any attempt to remove the subsidy must be very well-managed,” the former Minister said on the NTA Good Morning Nigeria programme.

He noted that in 2016, the government wrote to the Nigeria Labour Congress (NLC) and all the trade unions, adding that meetings were held with the security apparatus.

Kachikwu said: “Even when there was a consensus on how we were going to do it, we still had an issue at the very tail end of the moment; NUPENG and PENGASSAN supported but, of course, the other members of the trade unions pulled out.

“Eventually, thankfully, Nigerians saw through what we were trying to do and let it happen. And thank God that happened at the time because when you look at the gap today, the landing cost is about N180 per litre and sale price is N145. Imagine if it (pump price) was N90-something; we will literally be a bankrupt country.”

The minister added: “The point I am making is that anything you are going to do on subsidy requires a very efficient management of information – getting everybody who are stakeholders to tie into it.

“Should we deal with the removal of subsidy? I was going to say when I assumed this position that there was no way I was going to tolerate a subsidy regime at the time in 2015 of about N1.2tn-N1.3tn. There was just no way; we didn’t have the capacity to continue to pay.

“So, I convinced the President that this needed to happen; thankfully, he listened, he agreed and we did. Now, we then had over-recovery period for quite a while and then we went into this upswing in prices that has now taken us again into under-recovery.”

The poor pays price

The pump price for Dual Purpose Kerosene (DPK) popularly known as kerosene skyrocketed to N500 in Nigeria due to inability of local refineries to produce the product.

The NNPC, expectedly, did not only absolved itself from being responsible for the high price, it also blamed the price trend on deregulation.

The Corporation, News Agency of Nigeria (NAN) reported penultimate Sunday, attributed the increase in the price of household kerosene in the country to the pressure of demand and supply.

A survey by NAN in some outskirt of the Federal Capital Territory indicated that the price of kerosene ranged between N400 and N500 per litre.

Most filling stations along the Kubwa express road, Dutse, and Zuba, the agency reported, hardly sell the product.

Most of the consumers buy the products from the road side.

At Dutse market, the price was N400 per litre while within Kubwa it is sold between N450 and N500 per litre.

Mrs Halima Saidu, a seller at Kubwa village market, told NAN that she buys from filling stations at different prices.

“I sell at N450 per litre now but if I buy at higher price at the filling station, I will sell above that,’’ she said.

What NBS records says

It will be recalled that he National Bureau of Statistics (NBS) in its National House hold price watch last June, said the average price per litre paid by consumers for Kerosene increased to N316.43 in June 2 from N315.91 in May.

The NBS said the price of kerosene increased by 0.17 per cent month-on-month and 13.14 per cent year-on-year in the period under review.

The report said states with the highest average price per litre of kerosene were Anambra at N381.25; Abia, Bayelsa and Akwa Ibom N356.67 and Enugu N352.78.

NNPC reacts

Meanwhile, the NNPC Group General Manager, Group Public Affairs Division, Mr Ndu Ughamadu, was quoted to have told NAN in Abuja that the price of the product had been deregulated.

“The point remains that the prices of the kerosene is deregulated,” he said. “It is not as controlled with reference to Premium Motor Spirit (PMS) known as Petrol, that is why we see the prices moving up and down.

“The important thing is that the trend you are seeing there had to do with supply and demand. The more the demand, the higher the price locally,’’ he said.

Ughamadu said that the NNPC remained the sole importer of the product and had been augmenting it with the skeletal production from the refineries.

He reiterated the commitment of the corporation to the adequate supply of petroleum products for Nigerians.

“The corporation is doing everything to ensure that we import more volumes of kerosene because, we believe that this is the energy source that the low income earners in the country use,’’ he added.

Last line

The Federal Government, it appears, has no clear thought on what to do with the four refineries in the country. At one stretch, it sells the assets, at another it stops the sale. At one occasion it talks about co-location, at another it talks about divestment.

At one point, the government talks about competition at another, it talks about collaboration with the 650,000 barrels per day private refinery owned by the richest man in Africa, Aliko Dangote.

What Nigeria needs at this moment is for the government to be sincere with its plans for its refineries, support private investments in refining locally and rally all stakeholders for transformation  of local refining. The monumental waste of time and resources on the ailing assets must stop.

Advertisements

           

… CLICK HERE TO GET IT!