The Chief Corporate Communications Officer of the NNPC Ltd, Olufemi Soneye has explained that Nigeria’s foreign exchange policy is making it difficult for marketers to import petrol.....KINDLY READ THE FULL STORY HERE▶
This is just as the President of the Trade Union Congress, Festus Osifo, said the naira volatility is responsible for the high cost of petrol.
The federal government removed the multiple exchange rate regime, preferring that the Central Bank of Nigeria runs a ‘managed float’ foreign exchange regime.
This has led to the country’s currency the ‘Naira’ exchanging for as high as N1,500/$.
Soneye, who made this known while responding to Former Lagos State Commissioner for Transport and Environment, Muiz Banire, stated that rather than commend the Company for its effort to stabilise petrol supply would rather prefer to make all kinds of ignorance and mischievous accusations.
In an article in the Sun newspapers, Banire (SAN) has alleged that the NNPC Ltd is the black hole of Nigeria. Explaining further, Banire had stated that the oil Company was responsible for all the problems currently plaguing the country.
The NNPC Ltd CCCO insisted that rather than blame the Company for the present situation, Nigerians should understand that the company’s critical role as supplier of last resort has helped mitigate the situation.
Soneye said, “Barely three months after the Federal Government announced the removal of fuel subsidy, it became difficult for both major and independent petroleum products marketers to import petrol because of the foreign exchange policy. They could not source forex to continue to bring in petrol. Since then, NNPC Ltd has been importing the product and selling at almost half price in keeping with the provisions of the Petroleum Industry Act (PIA) which designates it as the fuel supplier of last resort. Yes, there have been supply hiccups here and there because of the financial constraints imposed by the transaction. Just imagine the hardship the nation would have suffered if NNPC Ltd was not there to play the role of supplier of last resort! NNPC Ltd is the reason Nigerians continue to enjoy lower pump price for petrol than they would ordinarily pay for the product. How then does such a company become a black hole?
“Railing at the NNPC Ltd without a thorough understanding of the issues that threw up the current challenges in the oil sector, as most of the commentators have been doing, will yield no good for the country. At this critical intersection, the task for all well-meaning Nigerians should be how to find lasting solutions to the mischiefs in the oil sector and not to look for scapegoats, as Dr. Banire has done.
“The assertion that the NNPC is responsible for this state of affairs is moot. The policy of fuel subsidy is not the preserve of the NNPC. Various administrations over the years have thought it wise to subsidize the cost of petroleum products for citizens. They came up with different methods of doing that. The role of NNPC Ltd has been to implement the policy as decided by government. At a point when the various administrations felt that the fuel subsidy policy had become a burden that should be done away with, they made it known. NNPC Ltd, as the national oil company, implemented it. This was the case in 2012 when the nation went up in protest against the government’s decision to remove fuel subsidies. The same scenario repeated itself in 2019 when the then administration came up with the policy to remove fuel subsidy. NNPC Ltd is neither responsible for the policy of fuel subsidy or its removal.”
Speaking further, the NNPCL spokesman said Banire in his writing failed to talk about the activities of smugglers, street urchins as being partly responsible for the situation.
He, therefore, urged Banire to do a little bit of research before he goes to the press saying that given “his level of educational accomplishments, he should have the capacity to research very well into the subject matters of their editorial interventions so that they do not argue, assert and progress in error(s).
“For Banire, NNPC Ltd is responsible for everything that is wrong in the oil sector. He even blames smuggling and the unauthorized sale of petroleum products to street urchins who in turn trade it in the black market in jerrycans on the NNPC Ltd. But does he have evidence that the unpatriotic marketers who divert petroleum products meant for local consumption to neighbouring countries are staff members or representatives of the NNPC Ltd? Does he have any shred of evidence that the boys who sell fuel in the black market in jerrycans source their products from NNPC Retail Ltd.’s stations? The least one would expect from a lawyer of Banire’s standing is a fact-based and not speculative commentary.
“The NNPC Ltd has turned a corner since 2018 when it began to prepare for the enactment of the Petroleum Industry Act, which was eventually passed into law in 2021. Apart from deepening its commitment to accountability and transparency by regularly publishing its audited annual financial statements, it has become a profitable company with undisputable growth trajectory. It recorded an unprecedented N3.29 trillion profit in its recently released 2023 audited financial report. But this fact is conveniently lost on Dr. Banire who insists that he has not seen any difference between NNPC as corporation and the commercially focused NNPC Ltd that was incorporated in 2021. Fortunately, it does not take Banire to see or believe that NNPC Ltd, as presently constituted, has broken away from its debilitating past for it to be true. He is at home with the legal maxim: “Res Ipsa Loquitur”, meaning the facts speak for themselves,” he added.
Naira volatility
Osifo, who is also the President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), stated that petrol would have sold far lower than the current price if not for devaluation.
With a weak naira, marketers continue to pay more to bring petrol into the country noting that it has led to high prices of fuel.
The TUC President disclosed that the Nigeria National Petroleum Company Ltd has been the one absorbing the differential.
According to data, the landing cost for PMS presently is about N1100. Thus the State owned oil company absorbs about N600 for every litre of petrol.
Last month, NNPCL has said that it is facing ‘financial strain’ due to its role as a fuel supplier of last resort.
Osifo asserted tackling the present challenge would involve the government granting a special exchange rate regime to the NNPC Ltd.
This he said would enable marketers to purchase petrol from Dangote Refinery at a reduced rate, leading to a decrease in fuel prices.
He added that “if NNPCL is granted a special forex rate of about N1000/S, the cost of petrol importation will crash, and fuel prices will drop to around N600. per litre”.
“If you give a special rate to NNPC, you don’t need to pay for subsidy anymore,” Osifo said, citing the example of Dangote Refinery, which was granted a special rate to sell petrol.”