What FG Needs To Do To End Fuel Scarcity – Kachikwu

-It is shameful that the government has failed to get oil sector businesses right – Kachikwu

-If we are going to sell at N145 per litre, we are going to put mechanisms in place – Kachikwu

Kachikwu reveals strategies to end fuel scarcity

The Minister of State for Petroleum, Ibe Kachikwu, has said that the recurrent fuel scarcity and instability in price instability would not stop unless the Federal Government removes the inconsistency between pump price and landing cost of the product.

Kachikwu made the assertion while making a presentation at a public hearing on the fuel crisis put together by the National Assembly.

The  Nigerian National Petroleum Corporation (NNPC) boss said it is shameful that the government has failed to get oil sector businesses right.

He noted that the NNPC became the sole importer of petrol because of difficulties faced by oil marketing companies, a situation that greatly affected product supply.

The minister said:  “We need to address the issue of pricing. If we are going to sell at N145 per litre, we are going to put mechanisms in place, so that the private sector can go back into importation. The landing cost of the product is about N170 to N171. The price at which we sell today is N145.

“So, there’s a disparity between N171 and N145. What this means is that those individuals who are really there, not with an obligation like NNPC which has to meet national supply, but with a commercial bend, will not bring in products or they are going to sell at a loss,” he said.

He noted: “We need to free the marketers to do their business. To do their business, we need to address the pricing issue. One model, for example, is at the time we got the approval of N145, the exchange rate was N285 to $1. Today, it is N305. So, even at the minimum, there’s a gap. One mechanism will be to work with the Central Bank of Nigeria in terms of exchange rate mechanisms.”

The minister also intimated the legislators that government was considering tax reversion, emphasizing that fuel importers pay taxes.

He questioned that: “Is there a possibility to capture some of the taxes they pay, to account for some of the differentials in importation that they would have before they pay their tax?”

He added that: “We are looking at whether, theoretically, you could respect the N145 per litre price and have a plural pricing system, so that NNPC and all its stations and affiliates sell at N145. And at the same time, the private marketers are able to bring in product at their own cost and sell.”

“As long as prices are hovering around N350 per litre on the borders and we are hovering at N145, there is a huge incentive to export product illegally. We have not been able to police our borders properly. Trackers must be placed in every truck that is carrying product in this country.

“You also need to deal with the infrastructural deficit issues. If we cannot repair our pipes at the speed at which we want, we will need to bring in the private sector and concession some of these pipelines, so that they can repair them and put them to use, so that in moments of emergency, we will not go through this kind of problem.”

A committee has been set up to consider issues in the industry and by the next 18 months, a measure of progress would have been achieved, Kachikwu told the lawmakers.