During his presentation at the Federal House of Representatives on Monday, the minister of state for petroleum resources, Ibe Kachikwu, revealed that the current hike in the pump price of petrol is different from that which the administration of former President Goodluck Jonathan executed in 2012.
Kachikwu said the Goodluck Jonathan-led administration had money to fund subsidy, unlike the Muhammadu Buhari administration.
“The average price crude oil then was valued at $110 per barrel and there was availability of funds to cater for the subsidy regime due to booming oil prices.
“Importation was based on 50 % financing from NNPC and 50% from oil marketers, while sourcing of foreign exchange for importation of petroleum products for both the NNPC and oil marketers was solely from the Central Bank of Nigeria and at official government rates.
“Presently, financing for importation of products is almost 100% handled by NNPC and this model is unsustainable,” he said.
The minister also alleged that the administration saw a “lack of strategic plan and investments in refineries and pipeline infrastructure meant that the sector could not attract investors”.
Speaking about the current regime, Kachikwu said the average price of crude oil is valued at $40 per barrel, emphasising “lack of funds to cater for the subsidy regime owing to low crude prices,” adding that the current regime is suffering from “non-availability of foreign exchange to import petroleum products.”
“Marketers have drastically reduced their importation since Q3 2015 due to a scarcity of forex. There is a need for them to source forex independent of CBN to be able to meet the nation’s demand,” he said.
He added that his team has “ongoing strategic plans and investments already on ground to ramp up the country’s refineries to attract investors and in the long term become a net exporter of petroleum product.”
While responding to a question on why NNPC stations which get locally refined products at little or no cost were selling almost at the same price as independent marketers, he said:
“That is being looked at. The NNPC mega stations are supposed to sell at a much lower price than the other marketers but right now some of them are selling between N143 and N145. That is something we are looking at correcting.”