Kyari: N130 billion monthly losses due to cheaper gasoline is no longer sustainable

• The corporation records N2.1tn of gasoline sales in one year
• Sylva explains why Nigeria wants to import fuel from Niger

Deji Elumoye, Emmanuel Addeh in Abuja and Peter Uzoho in Lagos

The director general of the Nigerian National Petroleum Corporation (NNPC) group, Malam Mele Kyari, yesterday launched a case to quickly end talks between the federal government and an organized workforce to resolve a dispute over appropriate gasoline prices.
He expressed concern about the current deteriorating commodity prices, which said the NNPC was losing N130 billion a month due to the sale of goods below the market price.

He warned that the corporation could no longer bear the loss.
However, he told State House reporters in Abuja that plans are underway to exit the downsizing regime.
The corporation also said yesterday that it generated N2.197 trillion from gasoline sales between December 2019 and December 2020.

In addition, the Minister of State for Petroleum Resources, Chief Timipre Sylva, explained why Nigeria wants to import fuel from the Republic of Niger and justified the federal government’s plan to rehabilitate the Port Harcourt refinery with $ 1.5 billion.
Kyari said the price of a fuel pump in the country is far lower than in neighboring countries.

He stated that the reduction in prices should be addressed soon in order to equalize it with the real value of the product.
He said: “Today as we talk, I will not say that we are in a subsidy regime, but we are in a situation where we are trying to get out of the selling price of the undervalued price until we reach the full value of the product in the market. We want to take this opportunity to tell you that gasoline today is sold over N200 per liter across our borders, and in some places around N500 per liter.

“In some countries, Nigerian fuel is the fuel in their territory and we supply almost everything in the West African region. We still can’t afford it because we have our problems. Therefore, the final exit from this is completely inevitable.
“I don’t know when that will happen, but I know that some engagements are taking place. The government is concerned about the natural impact of price increases on our transportation and other consumer aspects of our society. “

He put daily gasoline consumption at 60 million liters, at a selling price of N162 per liter, while the actual market price is N234, leaving the NNPC at an additional cost of about N130 billion per month.

“Current consumption is about 60 million liters per day; we sell at N162 per liter, and the current market price is N234, the actual market price today. The difference between the two is multiplying 60 million by 30 which will give you a month. Now I don’t have numbers, this is a simple arithmetic we can do. But if you want accurate data from our books, I don’t have it at the moment, but it’s between N100 billion and N130 billion a month. I don’t have the exact number. ”
Kyari said the NNPC remains the sole importer of fuel.

He said the federal government would continue to engage in organized work with the goal of achieving the right gasoline price regime, as well as imposing measures to mitigate the effects of the planned increase in fuel prices on people.
Speaking about the agreement between Nigeria and the Republic of Niger on the import of gasoline from the neighboring country, Sylva said that it is an increase in trade between the two countries.

According to him, Nigeria wants to legalize the successful illegal sale of petroleum products that is already taking place between countries, and it should also share its experience in the oil exploration sector with neighboring countries.

He said: “You know that Niger is a smaller country and that Nigeria is more experienced in oil exploration than most African countries. You will find that most of these countries have these limitations. Although we have this agreement with Niger, but they have restrictions on how to deliver it to this country because of the contracts they have with the Chinese. So if we realize they have limitations, we can change them.

“The whole idea is that Niger has 20,000 barrels per day (bpd), which is even more than their consumption.
“Illegal trade is already taking place between Nigeria and Niger. So what we want to do is see how we can legalize it. We want to start a business with our neighbors. This is what ECOWAS and AU are trying to encourage. It is interregional trade and we are starting to trade with each other. “

On why the federal government planned to invest $ 1.5 billion in the rehabilitation of the Port Harcourt refinery, while talking about privatization and commercialization, he said: “I have always said that our refinery cannot survive with the subsidy regime because you cannot refine at prices and sales at a subsidized rate. Now these restrictions will be removed by deregulation. This is more of a reason why we need to repair refineries so that refineries can now function optimally. “

The minister said the government had decided to renovate the refinery based on expert recommendations.
“Which is better – to privatize a non-functional refinery or to privatize a functional refinery?” A functional refinery will definitely bring more for the government than a non-functional refinery. Therefore, we believe that we must rehabilitate this refinery and then the government will later decide whether to privatize or commercialize. But at the moment, we want to give the Nigerians a functional refinery, ”Sylva said.

He expressed optimism that the draft law on the oil industry, which was repackaged last year and sent to the National Assembly, will be adopted next month.

He said: “From the way the President of the Senate, Dr. Ahmad Lawan, and Speaker of the House, Hon. Femi Gbajabiamila, who recently spoke about PIB, I know that the bill will be adopted as soon as they return from the Easter holidays in April. “

Sylva, however, said he could not say whether 2.5 percent was earmarked for host communities because their share of profits in PIB was resolved based on a request from representatives of host communities to increase it to 20 percent.
According to him, the two houses of the National Assembly have the last words about it “and I think that the leadership of the Assembly will be in a position to discuss it.”

Meanwhile, the NNPC announced yesterday that it generated N2.197 trillion from gasoline sales between December 2019 and December 2020.
The figure is contained in the December 2020 issue of the NNPC Monthly Financial and Operational Report (MFOR).

Statement by the General Manager of the Group, Corporate Public Affairs Department, dr. Kennie Obater, that the company for the marketing of petroleum products (PPMC) sold and distributed 2.26 billion liters of white products in December 2020, compared to 1.72 billion liters last year. November.

It is added that it contained 2.254 billion liters of gasoline, which means 72.72 million liters per day, 11.40 million liters of diesel and 0.48 million liters of kerosene.

The total sales of white products from December 2019 to December 2020, the corporation stated, amounted to 18.456 billion liters, while gasoline accounted for 18.325 billion liters or 99.29 percent.
The NNPC said the amount processed to N288.77 billion was recorded in sales of white products by PPMC in December 2020 compared to N226.08 billion in sales in November 2020.

“Total revenues generated from the sale of white products for the period December 2019 to December 2020 amounted to N2.217 trillion, with gasoline contributing about 99.09 percent of total sales worth N2.197 trillion,” the NNPC said.

According to the corporation, it also recorded a growth of 80.12 percent in the “trade surplus” for December 2020, amounting to N24.19 billion compared to N13.43 billion surplus recorded last November.

The NNPC stated that its trade surplus or trade deficit is derived after the expenditure profile is deducted from revenue in the observed period.

According to the report, the operating revenues of the NNPC Group in December 2020 compared to November 2020 increased by 33.44 percent or N137.00 billion and amounted to N546.65 billion.

Similarly, spending for the month rose 27.54 percent, or N121.11 billion, to 525.47 billion.