Indication emerged in Lagos on Wednesday that crisis causing scenario may be hovering in the nation’s downstream petroleum sector which may land the country in another deadly round of fuel scarcity and eventual hike in pump price even in recession.
This is coming from the position of the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who disclosed that his ministry had been struggling in maintaining steps to keep the pump price of Premium Motor Spirit (petrol) at N145 per litre.
He fingered significant challenges in the downstream sector as fueling another round of fuel crisis, but for the managerial intelligence of the government.
Before now, majority of independent marketers had abandoned products importation because of forex crisis, leaving the NNPC to continue the importation on the wings of CBN’s easy forex access window which was not available to independent marketers. But now, it appears that even the NNPC and CBN are stretched to breaking limits, thus forcing the minister to begin to open up on what NNPC is really facing.
Currently, several private depots had been dry as only NNPC is importing and analysts had argued that the drive by NNPC may not pass the test of time after all.
Business Hilights recalls that leading finance analysts at FDSH Marchant Bank had on Monday averred that the success of early exit from the recession will be dependent on the ability of government to maintain the current fuel pricing template as happenings are no more favouring the price.
The Minister, who dropped the hint in his keynote address at the Rainoil 20th Anniversary Lecture, said the ministry would continue to work with the Central Bank of Nigeria to make foreign exchange available to marketers for importation of petroleum products.
Dr. Kachukwu, represented by the Group Executive Director/Chief Operating Officer, Downstream, Nigerian National Petroleum Corporation, Mr. Henry Ikem-Obih, said the issue of freighting and docking was addressed last month.
According to him, “We are also working very hard with the NNPC to reduce some of the charges on products such as the usual five per cent provision on proforma invoices as allowed for ship-to-ship operations.
“We are doing all these to help manage and maintain the current price ceiling of N145 per litre in the face of very significant challenges.”
He further disclosed that the NNPC had recorded commendable performance in service delivery, products supply and distribution, adding, “It has done what it is supposed to do as a supplier of last resort. But the reality is that the NNPC needs to be run as a business.”
Kachukwu noted that “when 50 per cent or more of products are being brought in by marketers, there will be more activity in the sector, jobs will be created and more taxes will be paid to the government”.
“So, we must begin to move the market to a point where private sector operators are more involved. If we achieve that, everybody will compete and have a longer term view of the market from an investment standpoint.