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Why FG Cannot Introduce Subsidy On Diesel – NNPC Boss

Why FG Cannot Introduce Subsidy On Diesel – NNPC Boss

It is regrettable that Nigeria’s petroleum refineries are not working and the possibility of introducing subsidies on Automotive Gas Oil, also known as diesel, is unlikely, the Federal Government has said.

The Chief Executive Officer (CEO) of the Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari, who made this known in Abuja on Tuesday stated that the government cannot afford the payment of subsidies on diesel.

He made the comments while appearing before the House of Representatives Committee on Downstream, alongside the CEO of Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, among others.

The lawmakers had summoned stakeholders in the oil and gas sector, including Kyari and Ahmed, to an investigative hearing over the scarcity and the rising cost of Premium Motor Spirit (also known as petrol), diesel, and Liquefied Petroleum Gas, LPG (also known as cooking gas) in the country.

In his presentation, the NMDPRA chief suggested three measures to be taken to address the challenges with the supply and distribution chain.

He said the “required amount of forex for importation of the petroleum products (should) be made available to the genuine importers at CBN official rate.”

Ahmed also asked the government to “encourage the establishment of more local refineries and LPG processing facilities to meet domestic demands,” adding that “an increase in the LPG supply from major domestic producers, including NLNG, BRT processing, CNL, LPG, FSO,” would resolve some of the issues.

The NMDPRA boss stated that in addition to the three suggested solutions, “an extensive consultation is required among key stakeholders towards lessening the present tension being generated by the global high oil prices.”

“Presently, Nigeria is a net importer of refined petroleum products, including AGO, as the country imports about 100 per cent of AGO consumed locally,” he said. “An average of 12 million litres is also being consumed daily based on average truck-out quantity.

“The upswing in international price, combined with the prevailing naira/US dollar exchange rate, contributes about 80 per cent of the product price at the pump. While the official naira/US dollar exchange rate has remained relatively stable at about N415/US dollar since the beginning of the (Russia-Ukraine) war to date, the parallel rate on the other hand has increased considerably.

“The challenge with this is that petroleum products importers are unable to access the required amount of forex at the official rate and, therefore, rely on the parallel market to complement their forex US dollar requirements. In addition, the monitored price of AGO currently ranges between N710/litre and N750/litre in the coastal areas, while the LPG price is about N800/kg.”

Only One Solution

When asked to be specific on the immediate solution, he stated that the respite to cushion the effect of high price was to make foreign exchange available for marketers to import AGO at the official exchange rate of N415 to a dollar.

“We have only one solution if I can say it; make forex available to importers to import at the official exchange rate. If we do not do that, I do not see any other solution. Even if our refineries are back on stream, they are buying crude at the official international price,” Ahmed proposed.

According to him, the transportation industry heavily relies on AGO to move goods and services and as such, diesel is a major factor in the distribution of PMS being presently regulated.

“One of the major reasons for the scarcity being witnessed in the our country is as a result of the rise in the price of AGO,” said the NMDPRA boss who hinted that President Muhammadu Buhari had approved the upward review in freight rates by N10 to alleviate the challenges, effective June 1.

This, he explained, was in the effort to alleviate the challenge resulting from the upswing in the global price of AGO and the implication on the cost of the distribution of PMS nationwide.

In their separate presentations, representatives of oil marketing bodies, the Independent Petroleum Marketers Association of Nigeria (IPMAN), the Depot and Petroleum Marketers Association of Nigeria (DPMAN), and the Major Oil Marketers Association of Nigeria (MOMAN), sought the government’s intervention regarding forex with hopes that functional refineries would resolve some of the issues.

A file photo of GMD/CEO of NNPC, Malam Mele Kyari.

No Guarantee

But the NNPC chief, in his remarks, faulted some of the suggestions from the NMDPRA and the marketers.

“In our country today, we do not produce AGO and we regret that our refineries are not working,” he said. “Are we doing anything about it? Yes. I have heard the honourable members lamenting; yes, they (the refineries) are not working.

“This is the truth. I don’t want to bore you with why they are not working, but they are not working; I admit they are not working but we regret it. I will invite this committee at your convenience to join us to see how much work we have done to get them back to work, but they will not come back tomorrow.

“They will not! You cannot start it tomorrow. We regret this; we regret this situation, and we are doing everything possible. As a matter of fact, we have decided to do a quick fix for the Warri refinery. The reason is very simple: we don’t even want to go the long route of doing comprehensive turnaround maintenance because we are concerned.”

The NNPC boss disclosed that Saudi Arabia’s Aramco recently bought a large amount of AGO and stockpiled it. “We were very surprised that Saudi Arabia would do this.

“No one knows what will come tomorrow. No one can guarantee the security of supply. That is why people are resorting to self-help. People are preserving the excess volumes that they have,” he said.

Kyari, however, decried that Nigeria imports almost every commodity “perhaps, maybe with the exception of food.” He added that while the country does not export, it cannot have foreign exchange.

As a result, he believes the Central Bank of Nigeria (CBN) and the governor, Godwin Emefiele, might not be able to provide forex intervention.

“There is a limit to what he (Emefiele) can do because as long as we are not productive, the only way you can cover FX gap is for you to go and borrow FX, and no one is going to lend you money to put on a subsidy; it does not happen anywhere in the world. No bank will lend you FX to go and put it into consumption.

“When Nigerians living in the diaspora used to be a very great source of forex. They can no longer send back because many of them are out of employment. So, they can no longer send money even to their parents. So, you cannot have it in your banking system,” he stated.

No End In Sight

On the way forward, the NNPC boss stated that the first step was to restore crude oil production.

He stressed that the current crude production, including condensate, was 1.4 million barrels while the budget level was 1.8 million.

He added, “So, we can’t meet it today. It is not possible. Today, we have over 205 illegal refinery sites. There are over 295 insertions on our crude oil production line. No oil company will continue to work; they will have no necessity or obligation.”

Kyari further said in part, “We have a problem, no doubt. I don’t want to bore you with why AGO prices are very high. They are very high today. At the risk of being repetitive with what Farouk said about what is happening globally, I think it is good to emphasise that the world has never seen this level of uncertainty around supply and demand. Even in 2012 and 2013, when we had crude oil prices reaching $143 (per barrel), the uncertainties are not like what we are seeing today.

“Today, countries are stockpiling petroleum products. Today, refineries are shutting down across the globe for reasons probably not connected with the Ukrainian war; for the very simple reason that the world decided that we will have an energy transition to eliminate fossil fuel.

“From that decision, many oil and gas companies have stopped investing in their plants and facilities because it does not make any further sense to do so. Shortly before COVID-19 (pandemic) – it did not start today – the world was already facing three million barrels of undersupply of crude oil in the market.

“COVID came, yes; it brought down the consumption. But shortly after COVID, today we have an undersupply of up to four million barrels of oil in the market today. So, there is simply no end in sight to declining crude oil prices within the next one to two years. Even if you decide to invest in oil today, you cannot bring oil on the table as you wish.”

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Development

Abiodun Promises More Infrastructural Development, Commissions Siun-Owode Road

L-R: Ogun State Commissioner for Works and Infrastructure, Engr. Ade Akinsanya; Chairman of the All Progressives Congress (APC), Chief Yemi Sanusi; a member of the House of Representatives, Olumide Osoba; Kwara State Governor, Mallam Abdul-Rahman Abdul-Razaq; Ogun State Governor, Prince Dapo Abiodun; his Deputy, Engr. (Mrs.) Noimot Salako-Oyedele and the Speaker, Ogun State House of Assembly, Rt.Hon Oludaisi Elemide, during the commissioning of the 6km Siun-Owode Road in Obafemi Owode Local Government area of Ogun State on Thursday.

Ogun State Governor Prince Dapo Abiodun on Thursday said his government will continue with its infrastructural drive, especially in the area of road construction as a catalyst for economic growth and development.

Abiodun spoke at the commissioning of the six kilometres (first phase) of the Siun-Owode-Ofada road in the Obafemi Owode Local Government of the state.

Speaking at the event, which was attended by the Kwara State Governor, Alhaji AbdulRahaman AbdulRasak, Governor Abiodun emphasized the importance of road construction in the overall development of the state.

The governor described the newly rehabilitated road as an alternative to the ever busy Lagos-Ibadan Expressway, adding that it would also impact positively on the socio-economic development of communities along the road.

He said the construction of the road was a testimony to the dedication to strategic and methodical development of infrastructure across the state to enhance the socio-economic landscape as enshrined in the “Building our Future Together” agenda of his administration.

“The road represents a vital link between communities to boost local economies and connect all those coming from Abeokuta to Siun, Owode up to Mowe. This local government is where people work in Lagos but reside and commune daily.

“The road is an alternative for people from Abeokuta to Lagos. It will significantly impact the socio-economy development of the state,” the governor noted.

He added that the road is the first to be commissioned this year, just as the Mowe-Ofada road has been completed, adding that his administration would soon commissioned more roads including the Ilaro -Owode road and the Gateway International Cargo Airport at Ilisan.

Governor Abiodun listed Obantoko, Gbonogun, Ikorita Meje-Aderinde-Olokotutu, Olomore-Sanni, Somorin- Kemta-Idi-Aba, Panseke-Adigbe as well as the Olusegun Osoba-Toyin- Agbado as some of the roads that have been attended to in Ogun Central Senatorial District, even as he pledged that more roads would be put in good shape soon.

Abiodun who spoke on why some road projects were delayed, blaming the development on the high price of construction materials.

He said: “We have had a slow down on construction due to the situation of things in the country in the last few months which has not allowed for objective pricing of construction materials.

“But for us, construction represents a lot. Besides the fact that road construction allows for movement of goods, services, and people, the construction industry is the largest employer of labour. So, we will continue to prioritize construction.

“We have harvested priority roads in each local government area. We will begin our reconstruction all over again as a result of the price stability. Our contractors will go back to sites. All the roads harvested during our last town hall meetings, you will begin to see construction on the roads.”

He called on the people to take ownership of the road and other infrastructure provided by the government by protecting them as they were commonwealth and taxes were used in providing them.

The Kwara State Governor, who is also the Chairman, Nigerian Governors’ Forum (NGF), Alhaji Abdulrahaman Abdulrasak, praised Governor Abiodun for the infrastructural revolution going on in the state.

According to him, the Abiodun-led administration has judiciously invested the commonwealth of the people.

He said he has visited other states in the country but was impressed with the level of development in Ogun State.

He called on his colleagues from other parts of the country to take a cue from Ogun State by providing their people with the needed infrastructure to enjoy the dividends of democracy.

The Senator representing Ogun Central Senatorial District, Shuaib Afolabi Salis, recalled that the road was pencilled down for reconstruction in 2022 and expressed appreciation to the governor, for not abandoning the road like his predecessors.

He called on the people to make good use of the road as it belongs to them.

The state Chairman of the All Progressives Congress (APC), Chief Yemi Sanusi, described the road as historic to the Egba people because of its interconnectivity to various communities and its importance to the commercial activities in the communities along the road.

The Chairman, Obafemi Owode Local Government Area, Hon. Adesina Ogunsola appreciated the state government for reconstructing the road and for providing a 7.5 KVA transformer to Owode to restore power to the town.

In his welcome address, Commissioner for Works and Infrastructure, Engr. Ade Akinsanya said the road, which was in bad shape for many years, was reconstructed with a standard drainage system to conform with the federal government’s specification for highways.

The event was attended by prominent dignitaries, including the Deputy Dovernor, Engr. Noimot Salako-Oyedele, former deputy governors, members of the National and State Assemblies, traditional rulers, party stalwarts, among others.

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GOVERNOR AIYEDATIWA NOMINATES 12 NEW COMMISSIONERS

Governor Lucky Orimisan Aiyedatiwa

The Governor of Ondo State, Honourable Lucky Orimisan Aiyedatiwa, has nominated twelve individuals for the position of Commissioner with the aim of enhancing the efficiency of governance and fostering continued progress across various sectors

According to a press statement issued by the Chief Press Secretary to the Governor of Ondo State, Prince Ebenezer Adeniyan, the announcement underscores Governor Aiyedatiwa’s unwavering commitment to fortifying the state’s leadership framework. The nominees, representing a diverse range of talents and expertise, have been selected based on their demonstrated dedication to the advancement of Ondo State.

The list of nominees, forwarded by Governor Aiyedatiwa to the Speaker of the House of Assembly, Rt. Honorable Olamide Oladiji, includes: Pastor Segun Ayerin, Mr. Olaolu Akindolire, Alhaji Hamidu Takuro, Dr. Banji Ajaka,
Mr. Boye Ologbese, Mr. Sunday Akinwalere, Deaconess Lola Fagbemi, Mr. Saka Yusuf Ogunleye, Mr. Rasheed Badmus, Mr. Olayato Aribo, Mr. Adewale Akinlosotu and Barrister Gbenga Olaniyi

Each nominee brings a wealth of knowledge, experience, and dedication to public service, underscoring Governor Aiyedatiwa’s commitment to assembling a proficient and capable team.

Governor Aiyedatiwa emphasized his confidence in the nominees’ capabilities to serve the state diligently. He urged the House of Assembly to expedite the confirmation process, recognizing the significance of having a fully constituted executive team to address the needs and aspirations of the people of Ondo State effectively.

As the state embarks on this pivotal phase of governance, Governor Aiyedatiwa reaffirmed his administration’s dedication to transparency, accountability, and inclusive decision-making processes that prioritize the welfare and progress of all citizens.

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Kano State Government subsidises Hajj fares

Governor Abba Yusuf of Kano State has extended a helping hand to intending pilgrims by subsidising their Hajj fares.

Under the auspices of the Kano State Pilgrims Welfare Board, each Kano intending pilgrim is set to receive N500,000 to facilitate their journey for this year’s Hajj pilgrimage.

The Director General of the Board, Alhaji Lamin Rabiu Dan Baffa, announced this while addressing journalists on Wednesday.

Dan Baffa emphasised that the decision was prompted by the recent hike in Hajj fares by the National Hajj Commission of Nigeria, NAHCON, attributed to the volatility of the forex exchange rate.

Acknowledging the prevailing economic hardships, Dan Baffa underscored the significance of easing the financial burden on intending pilgrims.

He urged all beneficiaries to settle the balance before March 28, 2024, in compliance with NAHCON’s directives.

He said the subsidy initiative targets those who have already initiated part-payments with the board, benefiting over 2,900 intending pilgrims thus far.

NAHCON’s recent announcement of a N1,918,032.91 increase in Hajj fares brings the total to N6,617,032.91. Fresh intending pilgrims are required to pay N8,254,464.74 for the full Hajj fare this year.

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