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Non Functional Refineries Reason for Fuel Scarcity — NNPC


CEM REPORT | Nigerian National Petroleum Company, (NNPC), has said that the current fuel scarcity and hike in the price of diesel is as a result of non-functional refineries in the country.

The NNPC also adds that unless oil marketers were allowed to import the product, the situation might persist.

NNPC, Group Managing Director (GMD), Mele Kyari, stated this appearing before the House of Representatives Joint Committee on Petroleum Resources (Downstream) investigating the increase in prices of diesel and cooking gas yesterday.

The GMD told the Abdullahi Gaya, led committee that the Ukraine and Russia war added pressure on countries to increase supply of petroleum products.

He however noted that the country cannot return the country to subsidy regime.

“My suggestion this moment is deliver supply, make sure oil marketers are also able to import, and there’s need to engage the CBN to create more dollars.

‘’Once we do this, dollars will be allocated for the import of AGO. That will also dampen the effects of going to buy dollar in the open market. So, you can have cheaper dollar and definitely it will affect the price.

‘’Secondly, the regulatory institutions, the authority, consumer protection council and NNPC, I suggest we need to sit jointly to see how arbitrage can be managed so that the end user is not completely exploited.

“Today, countries are toying with subsidy because prices are so high that they don’t think they can manage inflation associated with it.’’

Also addressing the committee the Chief Executive Officer of the board of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NPRA, Farouk Ahmed, supported the NNPC’s position on resuscitation of the refineries to boost up production level of petroleum products in the country.

He added that the Russia-Ukraine war has contributed negatively to the country’s oil sector.

He further said the present exchange rate is continually affecting importation of the petroleum products adding that key stakeholders needed to sit to find lasting solutions to the current oil crisis.

“It is important to stress that the country has no control over the price of AGO or any other petroleum products at the international market.

‘’However, countries all over the world are making various efforts at easing the present global high crude oil prices on domestic petroleum products prices. The following are recommended initiatives to address the current high prices of AGO and LPG in the country.

“Required amount of forex for importation of the petroleum products be made available to the genuine importers at CBN official rate; encourage establishment of more local refineries and LPG processing facilities to meet domestic demands; increase LPG supply from major domestic producers, including NLNG, BRT processing, CNL LPG FSO.

‘’Consequent upon the foregoing, an extensive consultation is required among key stakeholders, towards lessening the present tension being generated by the global high oil prices,”

Oil Marketer who also appeared before the committee shared the same position on the availability of foreign exchange to enable them import and bridge the gap in the supply chain.

Representative of Independent Petroleum Marketers Association of Nigeria, IPMAN, said:

“On a short term measure is the forex.  If we are able get forex, we will import diesel. If a lot of marketers are given forex to import at a government control rate, a lot of diesel will come into the country and we will sell at cheaper price.”

The Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) said:

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“It is what we get and based and the cost we receive determines what we sell.

‘’The solution is that if we are able to get forex at a good rate from CBN, then we will bring in diesel and the price will also reflect the rate we bought forex. If we get forex, we bring in the product and the price at the pump will reflect the fact we got the forex at a much lower rate.”

Also, Major Oil Marketers Association of Nigeria, (MOMAN), added:

“we align ourselves with what the GMD and other marketers said. It is true, if we get the forex we can bring the price down.’’

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