According to Chief Timipre Sylva, the Minister of State for Petroleum Resources, the Nigerian National Petroleum Company Limited is selling Premium Motor Spirit, more commonly known as gasoline, at a loss because of its mandate from the Federal Government about PMS subsidies.
Sylva made her comments as oil marketers warned that supply disruptions in the downstream oil sector, which frequently cause fuel shortages, might last until June due to the government’s intention to discontinue gasoline subsidies in that month.
At the start of the President’s Major General Muhammadu Buhari’s scorecard series (2015–2023), the petroleum minister addressed in Abuja (retd.).
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The Federal Government has budgeted nearly N3.6 trillion for fuel subsidies till June 2023, according to Zainab Ahmed, Minister of Finance, Budget, and National Planning, who stated this last week.
In her speech on Monday in Abuja, Sylva insisted that subsidies had been a hardship, but she emphasized that the NNPC had been forced to continue selling PMS at a loss because of the mandate.
He said, “The management of the supply situation under this subsidy regime is not easy. We must all agree that so much money is being burnt in our cars, but somehow we have to put funds to continue to keep the country wet.
“Sometimes if you really think deeply you begin to wonder what magic we are doing to be able to keep this country wet consistently. Considering that you buy something, let’s say for N10, and you are to sell it at a loss.
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“And then you are expected to go back to buy the same thing, and come back again to sell it at a loss. So at every point in time you are looking for more money to continue to buy it, because you’re mandated to sell it at a loss.”
Sylva added, “So if you are a businessman, look at it from this perspective, that you are now in the business where you are mandated to sell at a loss to the public. That is not an easy job, I must tell you.”
Respond in to a question on how he would feel when buying petrol at N300/litre, Sylva said he would not feel bad about it.
“If you ask me how I will feel as a private citizen to buy petrol at N300/litre, sadly, I will say I won’t feel bad, knowing the actual situation. And if you compare Nigeria to other countries, you will understand,” he stated.
The minister added, “When you convert the N300/litre that you are talking about to other currencies, then you will understand. A lot of you travel to the United Kingdom or the United States, how much do you buy petroleum products there? Even in Arab communities that produce crude oil.”
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Although he emphasized that the price of the good in Nigeria was not as high as that seen in other nations, he claimed that the subsidy on gasoline was no longer sustainable.
“Unfortunately we are still in a subsidised regime, which all of us know. As a country, I think it is a national consensus now that subsidy is not sustainable, but together we will get there,” Sylva stated.
He said until the cost of petroleum products were market driven, investors would continue to shy away from investing in the downstream oil sector.
“Under a subsidised regime, who is going to invest? If you build a refinery, how is your refinery going to make profit under a subsidised regime? But if you have a market-driven situation, you’ll see that a lot of investors will come.
“And the more refineries we have, this problem of access to petroleum products will be a thing of the past,” Sylva stated.
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On Monday, the federal government disclosed that it had bought shares in four refineries that are located across the nation.
It listed the refineries, which included the 2,500 barrels per day Duport Modular Refinery in Edo, the 5,000 barrels per day Waltersmith Modular Refinery in Imo, and the 650,000 barrels per day integrated Dangote Refinery in Lagos.
In addition, the government stressed that the facility had been finished and that the 60,000 bpd portion of the Port Harcourt Refining Company in Rivers State will start operating in the first quarter of this year.
This was revealed in Abuja at the ministerial scorecard series of the present administration by the Minister of State for Petroleum Resources, Chief Timipre Sylva, and the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited, Mele Kyari.
Sylva stated that the Federal Government owned 20% of the stock in the Dangote Refinery and added that the Federal Government had also acquired stakes in three other refineries.
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He said, “We have 20 per cent equity in Dangote Refinery and we have also taken 20 per cent equity in Azikel Refinery. We took 30 per cent in Waltersmith, and we also have 30 per cent in Duport Refinery.
“Duport Refinery is already finished. They’ve concluded the construction. It only remains to start operations. I’m sure that within the next one month or so, Duport Refinery will also start operations.”
The minister stated that certain modular refineries typically accessed crude oil from assets closer to the plants, despite the fact that the Dangote Refinery already had a formal contract in place with NNPC for the delivery of crude oil.
“So they (modular refineries) have this (crude oil supply) contract with private sector owners of these assets that are near them,” he stated.
On the rehabilitation of the Port Harcourt Refinery, the minister said the target date for the commencement of operations of the plant had been shifted to the first quarter of this year.
He said, “I announced last year, and from the very beginning, we have been saying the same thing, we didn’t say that we are going to complete the rehabilitation of the two refineries in Port Harcourt by May this year.
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“Our promise has been that the 60,000 barrels per day refinery, within Port Harcourt refinery, will be rehabilitated by end of the fourth quarter of 2022.”
Sylva then asked Kyari to speak on how far the NNPC had gone with the rehabilitation of the Port Harcourt refinery.
Responding, Kyari said, “The total rehabilitation of the refinery will take 42 months from the date of award of the contract. Typical of every refinery, we do the rehabilitation in phases.
“And our promise is to start up the fuel plant, which is 60,000 barrels per day component of this activity by the last quarter of 2022, but this is not practical. But we will start it up in the first quarter of 2023. Otherwise, every other process is going on.”
Reacting to the remarks of the NNPC boss, Sylva said, “In other words, what he is saying is that the rehabilitation of the 60,000 barrels per day refinery has been completed and is going to be started in first quarter of 2023 as promised.”
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