OrderPaperToday – The Senate on Tuesday mandated an ad-hoc committee to engage the Nigerian National Petroleum Corporation (NNPC), the Central Bank of Nigeria (CBN) and other stakeholders in a new move to end petrol subsidy.

The yet to be constituted committee has the ultimate objective of recommending measures for the country to exit the subsidy regime and a plan for domestic refining of crude oil with specific time frames.

These resolutions were made sequel to a motion moved Senator Rose Oko (PDP, Cross River) and 42 others on ‘exiting Petroleum Subsidy and Ensuring self-sufficiency in domestic refining of petroleum products.’

Oko noted that although Nigeria produces 1.7m barrels of crude per day, “its moribund refineries have very little refining capacity and imports roughly 90 per cent of its fuel, negating much of the benefits accruing to oil-producing nations from high crude prices.”

She informed that the NNPC has four major refineries with a combined installed capacity of 445,000 barrels per day and “despite the huge resources expended on Turn Around Maintenance, none of the four refineries currently works up to 50 per cent of their capacity according to official figures from the NNPC.”

Information from the Petroleum Products Pricing and Regulatory Agency (PPPRA) and the NNPC have it that between 2006 and 2018, at least N10trillion was spent on petrol subsidy, Oko said, noting also that “the Senate in May 2019 criticized the payment of N11 Trillion to oil marketers as subsidy in the last six years as it (the Senate) also approved the payment of additional N129 Billion subsidy claims to 67 petroleum marketers.”

She indicated that despite President Muhammadu Buhari’s declaration on removal of subsidy in May 2016 amid falling crude oil price and an economic recession, “more than $160 million was spent on subsidy in early 2017 as the national oil company absorbed costs due to an increase in crude oil price.”

Nigeria introduced petroleum subsidies in the 1980s as a temporary measure aimed at strengthening the local refining industry and improving product affordability and domestic consumption but “it has however become a permanent feature of our economic life and has not only continued unabated, but has sky rocketed over the years as successive administrations have failed to make Nigeria self-sufficient in domestic production of refined petroleum products,” the Cross Rivers Senator said.

She further informed that research by the Council on Foreign Relation’s Program on Energy Security and Climate Change has shown that in countries where subsidies account for a substantial portion of government budgets or national GDP and can be fiscally debilitating and economically damaging.

She stated that despite promises and plans by government to bridge shortages in downstream infrastructure and specifically fix Nigeria‘s moribund refineries and make them work to optimal capacity by 2019, “it will not materialize until 2020 when Dangote Petrochemical refinery‘s 650,000 barrels per day, Nigeria’s four refineries of 450,000bpd capacity and three modular refineries come on stream.”

LEAVE A REPLY

Please enter your comment!
Please enter your name here