The Federal Government has said that the challenges it faces in funding Joint Ventures (JV) agreements with its partners are as a result of the huge subsidy payments.
The Minister of State for Petroleum Resources and the Group Managing Director (GMD), Nigerian National Petroleum Corporation (NNPC), Dr. Ibe Kachikwu, stated this in Lagos on Monday during an interactive session with Coalition of Civil Society Groups.
According to him, “in the past five years, we have been funding the JV agreements by about an average of 30 per cent of what was required of us by our JV partners. We have been using the money meant for cash call obligations to subsidize the downstream sector over the years.
“When I assumed office in August (2015), marketers were being owed N600billion and we paid them. We discovered that about N10trillion was used to pay subsidy in last eight years and we said this cannot continue.
“Overtime, we lost control of subsidy and it continued to skyrocket. We couldn’t fund our JV obligations which stood at about $6billion”
He then blamed the fuel scarcity on marketers who were smuggling the products into neighbouring countries and inter-land where the products are more expensive.
“Prior to now, the product was being sold at an average of N400 per litre. Consider the fact they loaded petrol at ex-depot price of N77.66 per liter. Arbitrageurs were taking advantage of the gap and making extra profit for themselves.
“Effective Jan. 1, 2016, government has stopped subsidy payment on petrol. Jan-March, there was ‘over-recovery’ where consumers are paying more and we were saving the excess. In April, subsidy returns and we used the savings from over-recovery to off-set it.
“In the long run, investors will come and invest in the refineries on a JV basis and by 2018, we would be self-sufficient in crude refining,” he said.
Kachikwu argued that under the present liberalization of the downstream sector, no import permit is required to bring in product. He said interested investors need is to notify Department of Petroleum Resources (DPR) in order to check quality of the products.
“Capping of price is also a process because we have just started, we can’t leave the price open for now but ultimately PPPRA will begin to issue advice on pricing,” he said.
He pleaded with Nigerians to bear the pain of increase in petrol price because it would have been impossible to import enough petrol by the end of May.
“I won’t have been able to bring in products by end of May had it been that we continued the way we were going,” he said.
According to him, the bank’s strategy for youths’ employments between 2016 and 2025 and approved by the AFDB boards recently, critically showcased the continental apex financial institution’s high-5 priorities.
The bank’s new focus of Africans living condition and expansion of the employment frontiers for the youths, he said, was a conscious plan to hinge the continent’s inclusive growth on them.
“Jobs for youths in Africa is a bank-wide strategy which will create 25 million jobs and positively impact 50 million youths over the next decade. To accomplish this goal, the jobs for Youth in Africa Strategy 2016-2025 aims to increase inclusive employment and entrepreneurship, strengthen human capital, and create durable labour market linkages by making use of three strategic intervention areas.
The bank’s president also identified integration, innovation, and investment, as part of the policy thrust recently presented to the board.
Specifically, the policy aims at meeting demand challenges by creating greater economic opportunities for youth across socio-economic strata, rural-urban divides, gender and age groups.
It will also to address supply challenges by supporting regional member countries in private sector-centric human capital development, equipping youths with skills that position them for future employment and to address linkage challenges and better connect youth to economic opportunities.
The policy said that, if properly harnessed, Africa’s youth population, projected to be over 830 million by 2050, would support increased productivity and a stronger and more inclusive economic growth across the continent.
Available data showed that between 10 and 12 million Africans youths enter the labour market every year, with only three million classified as formal jobs.
He said that their commitment in warehousing youths’ development was to assist in equipping them toward the challenges of the information, communication and technological age.
To Adesina, the dividends of African youths’ employment would leverage incomes, stimulate higher standards of living, better health and education.
AFDB President submits also the continents GDP would increase sharply if Africa’s youth unemployment rate drops by between 10 per cent and 20 per cent.
Overall, he said that the strategic youth development partnership aims at increasing inclusive employment and entrepreneurship, strengthen human capital and creating durable labour market linkages by making use of Integration, Innovation and Investment.