The Nigerian National Petroleum Corporation has reduced its importation of Premium Motor Spirit, popularly known as petrol, from about 95 per cent to 50 per cent, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has said.
According to Kachikwu, the reduction has paved the way for massive investments in the downstream oil sector, as marketers have resumed importation of PMS following the petrol price modulation mechanism introduced by the government in May last year.
The minister, who disclosed this in a podcast message posted on his Facebook page on Saturday, also explained how his ministry was able to end the fuel subsidy regime, ensure petroleum product availability, as well as improve governance efficiency in the oil and gas sector.
Kachikwu said, “First we’ve moved from a fully subsidy based sector to a partially liberalised sector. I say partially because we haven’t quite achieved the template to have a fully liberalised sector. What that has done for us is that it has reduced consumption from 50 million litres to 37 million litres a day.
“Some of that figures are fraud-based, others are potential diversion numbers, but what is happening now is that the effect of our response curbed the appetite for consumption and left us with a much more robust reserve.
“In addition, the pricing governance, which was a modulating concept, enabled us to come closer to what the realities of pricing were and so this enabled marketers to jump back into the business and continue to massively import.
He added, “So what you find over a period of between when we introduced this measure (in May 2016) till towards the end of last year, was that the NNPC reduced its importation profile from supplying about 90 to 95 per cent of the market to about 50 per cent, which was massive, providing jobs, activity, investment and stability.”
Prior to Kachikwu’s statement, the NNPC had often said it was the major supplier of petroleum products, particularly PMS, supplying over 90 per cent of what is consumed across the country.
The minister further noted that the government had eliminated subsidy payments to oil marketers substantially, but stressed that the downstream oil sector had continued to encounter challenges.
Kachikwu said, “There isn’t fuel scarcity, we are not short of products, but yet the downstream and midstream sectors continue to remain challenged. And what we are going to do is to analyse what we have done so far and begin to throw solutions to some of these challenges.
“When we first moved in, we had refineries that were not producing, fuel subsidy issues of almost N15bn monthly expenses, massive diversion of petroleum products across borders. We are consuming about 50 million litres of products at the time, but that substantially has reduced now.
“We had issues of pricing efficiency and governance, for at that time the prices we were selling at were so ridiculously below what the sustainable prices are. And you find a situation where basically marketers disappeared from the industry. So we had massive shortages, queues and everything seemed to be breaking down. We’ve since come out from that.”
The minister said Nigeria should start moving away from the use of products like petrol, kerosene and diesel to using liquefied petroleum gas.
He said, “The reality is that all over the world everybody is moving to cleaner fossils. LPG provides that for us, gas does the same for us. So we need to begin to look at how we can install pipelines for LPG and take it to places of its consumption, where we can have vehicles that have the capability to potentially use gas in order to reduce PMS usage.”
To achieve this, Kachikwu said the government would collaborate with stakeholders in the sector in order to effectively meet its long-term target in the sector.