Reps, IPMAN, others task FG on adequate provision of forex to genuine importers of petroleum products

In the bid to bring succour to Nigerians over rising cost of Automotive Gas Oil (Diesel) and Liquified Petroleum Gas otherwise known as cooking gas, members of the House of Representatives and stakeholders in the oil and gas industry urged Federal Government to provide adequate foreign exchange to genuine importers of petroleum products at the official rate approved by the Central Bank of Nigeria (CBN).

The stakeholders gave the charge during the investigative hearing on a motion on the ‘Need to address the outrageous rise in the price of automotive gas oil (Diesel held at the instance of the joint Committees on Petroleum (Downstream) and Gas Resources, chaired by Hon. Abdullahi Gaya.

Earlier, the Group Managing Director of Nigerian National Petroleum Company (NNPC) Ltd, Dr. Mele Kyari blamed the rising cost of Diesel and Liquified Petroleum Gas otherwise known as cooking gas on scarcity of foreign exchange, illegal refining site and vandalization of oil facilities.

Dr. Kyari who frowned at the spate of vandalism oil facilities, argued that the development was responsible for the decline in production, adding that 27,000 barrels were lost overnight three days ago during a massive attack on one of the NNPC facilities.

While attributing the scarcity of petroleum products on non-functioning refineries in the country, the NNPC helmsman also blamed the rising prices of petroleum products across the world, on the ongoing Russia-Ukraine war was affecting supply of products.

Dr. Kyari who noted that most major oil companies were also shutting down due to the energy transmission to eliminate fossil fuel, he cautioned against suggestions that subsidy should be made available for diesel.

“In our country, we do not produce AGO (diesel) and we regret that our refineries are not working. Are we doing anything about it? Yes. We are working on getting them back to work. But they will not come back tomorrow.

“As a matter of fact, we have decided to do a quick fix for the Warri refinery. The reason is simple. We do not want to go the long route of doing comprehensive turn around maintenance because we are concerned.

“Today when you buy gasoline or AGO you must pay for it. The traders don’t care. The only way you can pay for it today in the market is that you must USD to pay. We do not have another means of getting USD more reliable than the production from the crude oil that we sell.

“Today we are net importers of everything, perhaps with the exception of food. So, when you don’t export you cannot have foreign exchange. Therefore, there is a limit to the call the CBN governor to provide for FX. There is a limit to what he can do, because for as long as we are not productive.

“The only solution is to restore crude oil production in this country. Our current crude oil production including condensate is 1.49 million barrels. The budget level as you are all aware is 1.8 million barrels. So we cannot meet it today.

“Today we have over 205 illegal refinery sites. There are over 295 insertions on our crude oil production line. We have over 200 illegal connections on our oil pipelines. Companies shut down because there is no further need to produce and that is what we are containing. There is massive intervention happening and we believe that we would restore the production through the intervention that we are doing.

“If we cannot take this back, we cannot even have the FX to fund even the AGO importation. So, it is not possible.

“I can assure you that by the end of July, we would restore the production to a level that we can say we are comfortable with and hopefully address some of the FX issues. When you go to the FX window of the CBN if the dollar is not available, if you give it out, it is simply another FX subsidy.

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“Therefore, there is a supply gap and one of the reasons and we are proud to say that it is good reason, is that we took down many of these illegal refineries and I can tell you potentially the AGO you use may be coming from illegal refineries and we took a significant number of them down and that is why you are seeing the supply challenge.

“I don’t think we should regret this. It is better that we should have zero from the illegal refineries than have them at all because it is a national disaster and we are poised to ensure that we take them down.

“But as you do this, you must bring in supply and that is why NNPC intervening sparingly but sufficient enough to cover the gap the other marketers are doing but not enough to provide 100 percent of supply into the country.

“The suggestion I am going to make is that the Federal Consumer Protection Council, the regulator and including NNPC, we have some level of control around this, at the fuel depots when we bring our products, we ensure that they sell at a mark off that is not beyond cost of acquisition and reasonable margin. This we are already doing.

“But you cannot say the same for the man who went to acquire FX at N600 to the dollar and brings in products and say you have to sell at the price NNPC is selling. So what we are doing is  a dilution of the market, because we have access to FX at N418 and therefore our prices are lower than what they would bring and ultimately it would dilute the market not necessarily competing with them.

“Can we increase supply from NNPC? Yes, provided we are able to restore crude oil production, otherwise the limit of our intervention cannot be endless. Lastly, we should not consider putting subsidy on AGO. We simply cannot afford it. We should not do it. This is the reality.  Can we manage the price within a range that is rational?

“That is free of excessive arbitrage. I think we can focus on this and work together the price so that exploitation does not come in,” he said.

In his presentation, Chief Executive Officer of Nigerian Midstream & Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed called for the establishment of more local refineries and cooking gas processing facilities to meet domestic demands and increase LPG supply from major domestic producers.

On his part, National President of the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), Mr. Oladapo Olatunbosun, said a reason for the rising cost of cooking gas was as a result of sharp practices in the industry.

He said unlike diesel which is imported, cooking gas was produced in the country, but profiteering was a problem.

“There is a lot of profiteering going on in the LPG business. The kind of market we are seeing today which the terminal owners are seeing, I must be sincere, there is a lot of cross-border trading. There are infrastructural challenges, but there are still human intervention that we need to control.

“How many gas plant owners are actually off takers? There are production going on in Edo in Oredo. How many of them are they selling? People come from different angles who are portfolio investors, they buy gas and they hack on it, the price goes up,” he said.

He said the problem can be addressed by taking the product directly to the people that need it.  Some marketers who were at the hearing appealed for the provision of FX from the CBN at a good rate to help address the challenge.