*Petrol marketers may shun importation as FG rules out price increase
Emmanuel Addeh in Abuja and Peter Uzoho in Lagos
The Nigeria Extractive Industries Transparency Initiative (NEITI) has called for the implementation of a special investigative panel’s report on oil theft and losses, submitted to the federal government on March 28, 2023.
This is as the foreclosing of any further increase in petrol price by President Bola Tinubu and the Nigerian National Petroleum Company Limited (NNPCL) may force many marketers of the product who cannot overcome the current challenge of accessing forex to shun petrol importation.
In a new policy advisory released by the Executive Secretary of NEITI, Dr Ogbonnaya Orji, the agency stated that the theft of Nigeria’s commonwealth by a few persons had done massive damage to the nation’s economy and therefore needed to be curbed.
NEITI recalled that as reported earlier, its audit reports covering 2009-2020, a period of 12 years, indicated an average of more than 140,000 barrels of crude oil daily loss, leading to the country being deprived of 619.7 million barrels, valued at $46.16 billion or N16.25 trillion during the period.
“This is more than Nigeria’s entire foreign reserves and almost 10 times the size of the country’s oil savings (excess crude account) as of 2022,” it noted.
The said panel, NEITI noted, was set up by former President Muhammadu Buhari’s administration and inaugurated by the erstwhile National Security Adviser (NSA) on December 6, 2022.
According to the agency, the investigative panel was established with the broadest possible terms of reference to advise the government on short, medium, and long-term measures to tackle oil theft and losses in the industry.
“NEITI was the only anti-corruption agency to serve on the panel among other reputable Nigerians carefully selected for the assignment. The report of the panel with specific, insightful findings and recommendations was presented to the former National Security Adviser, Maj Gen. Babagana Monguno (rtd), on March 28, 2023. The report is current and comprehensive in content, with specifics on what needs to be done.
“We now recommend that the government assemble a dependable team to develop an implementation plan with modalities and timelines to implement the report. NEITI can offer any additional required information and data to guide implementation.
“Our legitimate interest in the report is given the terrible damage oil theft has done to the country on revenues loss, environment, terrorism financing, stealing of Nigeria’s crude, transparency, and accountability in the oil and gas industry,” it added.
THISDAY had reported that Nigeria’s inability to ramp up production to meet the Organisation of Petroleum Exporting Countries (OPEC) output quota may have cost the country a gross revenue loss of about N6.8 trillion in the first seven months of 2023.
The analysis showed that while the total oil production shortfall was approximately 113.52 million barrels between January and July, the country failed to rake in an estimated $9 billion, at an average oil price of $80 per barrel during the period.
Still on oil matters, NEITI recommended that with the petrol subsidy now gone, the government should immediately launch a comprehensive welfare programme from the savings from subsidy removal.
The target, it said, should focus on transportation, possible review of workers’ salaries and emoluments as well as massive investments in physical infrastructure.
It also called for the creation of deliberate policy incentives and social safety nets for the poor and most vulnerable in health, access to micro credits, and relief in education, among others.
“The implementation should be open, transparent, accountable, and evidence-based to build citizens’ trust required to record visible impact,” NEITI advised.
Another game changer, it stressed, was to encourage more local refineries to come on stream, especially those already awarded licenses to establish private refineries in Nigeria.
The incentives to accelerate the process, the organisation said, may include tax holidays, institutional support, and availing potential investors in the downstream sector of the available opportunities within the existing ‘federal government ease of doing business policy.’
NEITI added that a team of experts could be set up to work out the details, the nature of support needed, the mode of application, the gestation period, and the projected impacts on the economy within the short, medium, and long term.
“In this direction, NEITI strongly recommends that ongoing private sector-led efforts in this area should be identified as a potential private investor initiative to address national emergencies and, as such, should attract presidential support such as visits, encouraging pronouncements, etc.”
Petrol Marketers May Shun Importation as FG Rules out Further Price Increase
In another development, the foreclosing of any further increase in petrol price by President Tinubu and the NNPCL may force many marketers of the product who cannot overcome the current challenge of accessing forex to shun petrol importation.
Following the alarm raised by the marketers that petrol price would hit N720 per litre in the coming weeks owing to the worsening of the foreign exchange situation and the depreciation of the naira, coupled with the rise in the landing cost of fuel, the President had last Tuesday through his Special Adviser on Media and Publicity, Ajuri Ngalele, ruled out further increase in the pump price from the current N580 to N617 per litre.
President Tinubu said rather than contemplate another increase in fuel prices, his administration would instead address the foreign exchange challenge and eliminate inefficiencies in the midstream and downstream petroleum sectors that were causing fuel prices to increase.
Earlier, NNPCL had in a statement on its Twitter/X Handle stated that there would not be any further increase in fuel price.
However, the pronouncements by the president and NNPCL had left the marketing companies in confusion as they negated the free-market regime introduced by the Tinubu administration.
The National President of the Petroleum Products Outlets Owners Association of Nigeria (PETROAN), Dr Billy Grillis-Harry, told THISDAY, yesterday, that with the announcement by Tinubu and NNPC, only marketers who can cope with the current forex issue can import petrol into the country.
Grillis-Harry argued that for the president and NNPC to rule out any increase in petrol price despite the soaring landing cost, means they have information that was not available to the marketers.
“Where the statement leaves the market is that those who have dollars to bring products will bring; those who don’t have dollars will not and therefore, there will be no supply. That is just the reality.
“And then, the president may have information that is very different from the one we have. Because if prices cannot change and there is no dollar to bring in products, it then means the government has information that we don’t have, and they must be able to cushion the effect.
“Marketers have clearly stated that they cannot import based on the current dollar issue. And then, those who have already ordered some products before this time are not able to meet up with their obligation. Also, don’t forget that NNPC doesn’t need dollars to import,” he added.
According to industry data, the landing cost of petrol has risen to N651.75/per litre, far higher than the N617 per litre NNPC had pegged the product.
A breakdown of the landing cost of petrol showed that as of last week, whereas the product cost was N627.82 per litre, the finance cost was N11.61, and the operations/administrative cost was N12.32. This brings the total landing cost to N651.75 per litre.
Marketers had insisted that with the current cost of the product, the appropriate pump price should be over N720 per litre.