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Review Fuel Prices Now, Says NNPC

Posted by By Mike Oduniyi on 2005/08/11 | Views: 408 |

Review Fuel Prices Now, Says NNPC

The Nigerian National Petroleum Corporation (NNPC) yesterday urged the Petroleum Products Regulatory Agency (PPPRA) to adjust pump prices of petroleum products to reflect the going rates in the international market, as it could no longer absorb the cost of fuel supply and distribution in the country.

* Kupolokun: No going back on deregulation

The Nigerian National Petroleum Corporation (NNPC) yesterday urged the Petroleum Products Regulatory Agency (PPPRA) to adjust pump prices of petroleum products to reflect the going rates in the international market, as it could no longer absorb the cost of fuel supply and distribution in the country.

NNPC Group Managing Director, Engineer Funsho Kupolokun, said failure to raise fuel prices now “will resort to chaos” in the fuel supply chain.

Kupolokun said the opposition to a further hike in the prices of petroleum products negates the tenets of deregulation, which provide for cost recovery.

“Deregulation has come to stay as everybody is happy with what we saw in deregulation in the past one and half years. If deregulation has worked, anybody who says we should not deregulate is not a friend of the nation,” said the NNPC chief executive.

The PPPRA, which also agreed with the NNPC on the need to adjust upwards fuel prices, is however, yet to get the go ahead from the Federal Government to effect the increase. The agency, made of stakeholders in the downstream petroleum sector drawn from both the private and public sectors, actually met last week to agree on a new price regime, but put the move on hold as the Presidency was yet to give its blessing.
Kupolokun, however, said that the finances of the corporation was depleting fast and that there was a limit the NNPC could go in funding fuel supply if it was to meet its obligation to the NNPC workforce “which includes over 600 fresh and young graduates.”
“Cost reflective price is the only way out. The NNPC must operate profitably, we must recover our cost,” said Kupolokun. “Something must be done about it, anything else is chaos.”
“We (NNPC) are not shy of what we believe in and to make our case. We are hoping and waiting for the PPPRA to do what it has to do,” he added.
He said that the government in a bid to solve the perennial fuel scarcity had in the past opted to subsidise fuel consumption as well as financial grants to the NNPC. These options, he noted, did not solve the problem of products shortages until deregulation policy was introduced in 2002.
According to him, the on going transformation in the
NNPC, aimed at repositioning the corporation to meet the new expectation of the government was very much on course.
“Our stakeholders demand of us constant availability of petroleum products at outlets at appropriate price.
As the driver of the economy, government demands from us increase in oil revenue,” he said.

Kupolokun and the Executive Secretary of the PPPRA were scheduled to meet last night in Abuja, THISDAY learnt.

The NNPC GMD said that once crude oil price drops in the international market, the domestic fuel prices would reflect that.

Crude oil price has remained at high levels since the beginning of this year, as the international market struggled to keep up with strong demand for crude and the fears of unavailability of spare capacity to meet demand.

Yesterday, Nigeria’s major export crude, the Bonny Light was traded $64.94 per barrels while the market’s benchmark crude the Brent, closed at $63.74 a barrel.

At the current market prices, the PPPPRA, the government agency managing the deregulation programme, said that the landing cost of premium motor spirit (PMS) known as petrol, stood at N65.04 per litre.

Adding distribution cost, the agency said the pump price of petrol should be N71.50 kobo.

Compared to the present open market price of N50 per litre, this implied that the NNPC records a loss of N21.54 on every litre of fuel sold.

Finance Minister Ngozi Okonjo-Iweala, while shedding light on why the Federal Government could not implement the 2005 budget on Tuesday, put government’s subsidy of the pump price of petroleum products at N112 billion. This, she said, represents the amount that the NNPC has not remitted into the Federation Account because the Corporation was using it to subsidise petroleum products.
Apart from the cost incurred on fuel importation, the Federal Government also sells crude oil to the NNPC for domestic consumption at international market prices.

The House of Representatives on Tuesday joined the Nigeria Labour Congress (NLC) to warn against any further price increase on products. In a motion, the lawmakers argued that the current high cost of goods and services in the country was not unconnected with past upward adjustments in fuel prices.

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