NNPC Fuel Import Bills: Still An Unresolved Matter? By Ifeanyi Izeze
Is it not becoming obvious that the President Muhammadu Buhari’s interventionist idea of running the nation’s downstream oil and gas sector has become a question, not an answer, because rather than solve the initial problems, it is expanding them and even creating new ones?
First, we need to ask: does the Nigerian National Petroleum Corporation (NNPC) still take 450,000 barrels everyday for domestic refining and the crude-for-products swap arrangement? This question is pertinent because the latest data released by the National Bureau of Statistics (NBS) shows that the nation spent a total of N760.437 billion importing petroleum products for distribution across the country between January and March this year.
As revealed, premium motor spirit (petrol) gulped the bulk, 4.052billion liters worth a total of N566.957billion or 74.55 percent of the expenditure. Automotive Gas Oil or diesel, followed with N187.556 billion for 1.307 billion liters while the remaining was spent on the importation of 41.059 million liters of Household Kerosene.
A further breakdown of the figures released in the Petroleum Products Import Statistics for first quarter 2017 by NBS showed that in January, a total of 1.155 billion liters of petrol valued at N164.408 billion were imported at the landing cost of N142.27 per liter. This rose in February to 1.27 billion liters valued at N183.672 billion, representing N144.53 per liter; while in March, a total of 1.625billion liters were imported at an average landing cost of N134.62 per liter, bringing total amount spent to N218.876billion. Of the total volume of Household Kerosene imported in the first quarter of the year, January had the highest of 27.822 million liters worth N4.067 billion at N146.19 per liter monthly average; which crash considerably in February when only 1.066 million liters got imported for N156.315 million at an average cost of N146.53 per liter; before rising to 12.169 million liters valued at N1.699 billion in March at N139.64 per liter.
It is noteworthy that the spot market price for the Nigerian elite crude grade, the Bonny Light, was at an average of about $50 per barrel during the period under review. So the question is: are we spending this huge amount on importation of petrol, diesel, and kerosene in addition to the 450, 000 barrels of crude the NNPC takes on daily basis or the expenditure is the equivalent derivatives from the value of the crude allocated to carter for our domestic needs? What actually is the NNPC policy on products pricing in the country? We’ve been told different things at different times as concerns the pricing governance from ‘total’ to ‘partial’ deregulation and now the current jargon is ‘price modulation’ whatever that means. And as said by the minister of state for Petroleum, Ibe Kachikwu in a recent podcast, “We’ve moved from a fully subsidy-based sector to a partially liberalized sector. I say partially because we haven’t quite achieved the template to have a fully liberalized sector.” Kachikwu stated in the podcast that, at the moment, the Nigerian National Petroleum Corporation (NNPC) was importing almost all the petrol used in the country, a responsibility he stated the corporation was undertaking at a huge cost. “What you find is that the NNPC continues to import massively on behalf of the Federal Government. It has gone back to about 90-95 per cent for the whole country and therefore its books are absorbing some of the cost implications of this.”
The summary of the minister’s explanations is that the federal government is still subsidizing petrol and has licensed the NNPC to become the oil industry monopoly in the corruption called fuel import subsidy. Otherwise, what does he mean by the “NNPC books absorbing some of the cost implications?” Whether anybody wants to hear this or not, if NNPC will ever operate as a profit entity, it must start to radically reduce its I-can-do-all-things Father Christmas role in the country’s mid and downstream sub-sectors. The cost of this role in the books of the corporation has helped paint a picture of a corrupt and inefficiently ran outfit. And nobody outside the NNPC system would ever agree that this heavy burden has been mainly because in order to provide petroleum products for domestic consumption, the government had to always use the corporation to play politics with issues of pricing efficiency and governance and this encouraged by the corporation’s manager who see the government’s meddling as opportunities for dubious activities.
Now, the Bureau of Statistics figure according to how petroleum products were distributed across the country also revealed that for the period under review, a total of 124,675 trucks were used to distribute about 4.052 billion liters of petrol across the country; while 42,140 trucks moved 1.311 billion liters of diesel; and 236.427 million liters of kerosene were transported in 8,226 trucks. Add the “lightering expenses which recently was reviewed from N4 to N3 for every litre and bridging equalization which now stands at N7.20 for every liter, you now begin to have an idea of the huge amount of money that goes into this fuel imports and distribution racket.
What are these allowances in the first instance? The bridging allowance refers to the cost element built into the products’ pricing template to ensure a uniform price of petrol across the country, while lightering expenses involve charges for moving products to depot areas from mother vessels offshore by light vessels due to the inability of the former to berth in shallow water depth. The question is: what is stopping the government from winding down the operations of the Petroleum Equalisation Fund (PEF) and transferring its bridging responsibilities to oil marketers? Can the administrators of the NNPC pretend not to know that the government-pegged price of N145 per liter for petrol is only obtainable within the city centers of Abuja and Lagos, not even in Port Harcourt and Warri that host a refinery each not to talk of other distant areas coastal facilities? So why do we continue to sustain PEF which at best has remained a conduit for fraud and corruption.
Is it not surprising that no single person in the entire NNPC system, DPR or the Office of the Minister of Petroleum can authoritatively say the exact daily volume of petrol we consume domestically? All we have are projections based on faulty and dubious assumptions. Figures ranging from 50 million liters to 37 million liters have been thrown at us at various times. If you don’t know what we consume, how are we going to plan for it? Uninformed extrapolations in this matter only breeds opportunities for corruption and this has been the case since we started this near 100 percent dependence on importation. Those who know would agree that the gap between 50 and 37 million is wide enough to accommodate all the wuru wuru in subsidy and equalization payments. How long can we continue like this as a country? God bless Nigeria!
Ifeanyi Izeze writes from Abuja. You can reach him at email@example.com.