The Federal Ministry of Petroleum Resources has said that the new price regime for petrol has potential to bring about $3 billion investments in both refineries and fuel retails this year. In a statement in Abuja on Tuesday, the Ministry noted that the country will stop importation when it reaches local production sufficiency, adding that the government was working on key initiatives towards boosting local refining capacity. “The overarching objective is to create a competitive downstream market in Nigeria and be a net exporter of petroleum products by 2019,” it said.
According to it, the FG has not deregulated the sector, stating that the Federal government through the new price regime will monitor prices of product to ensure that citizens get a fair value. According to the Ministry, the new regime would permanently eliminate subsidy payments which was estimated at N1 trillion in 2015 and about N16.5 billion between April and now. Indeed, it noted that Nigerian National Petroleum Corporation (NNPC) lost about 12.5 billion monthly when it took up the responsibility of fuel importation at subsidised pricing using crude oil as a means of exchange.
On the renewed insurgency and pipeline vandalism in the Niger Delta, the Ministry said it has drastically reduced national crude oil production to 1.65 million barrels per day against 2.2 million barrels per day planned in the 2016 budget. This, it said would further reduce income to federation account and also affecting crude volumes for Premium Motor Spirit (PMS) conversion and impacting forex earnings.
“In the absence of available forex lines or crude volumes to continue massive importation of PMS, it is clear that unless immediate action is taken to liberalise the petroleum supply and distribution, the queues will persist, diversion will worsen and the current prices will spiral out of control,” it stated.
The body further explained that the Federal Government already has an ongoing strategic plans and investments to push up the country’s refineries to attract investors and in the long term become a net exporter of petrol. “This government was elected on the foundation of trust and based on the implicit confidence in Mr. President’s ability to ensure strict compliance to the new framework and also to manage the proceeds from new pricing,” it stated.