The Minister of State for Petroleum, Ibe Kachikwu, said yesterday that the perennial petrol scarcity and price instability would only stop when the Federal Government removes the disparity between pump price and landing cost of the product.
Making a presentation at a public hearing on the fuel crisis jointly organised by the Senate and House of Representatives, Kachikwu described as shameful government’s failure at getting oil sector businesses right.
He noted that the Nigerian National Petroleum Corporation (NNPC) became the sole importer of petrol because of difficulties faced by oil marketing companies, a situation that greatly affected product supply.
A committee has been set up to consider issues in the industry and by the next 18 months, a measure of progress would have been achieved, Kachikwu told the lawmakers.
“We need to address the issue of pricing. If we are going to sell at N145 per litre, we are going to put mechanisms in place, so that the private sector can go back into importation. The landing cost of the product is about N170 to N171. The price at which we sell today is N145. So, there’s a disparity between N171 and N145. What this means is that those individuals who are really there, not with an obligation like NNPC which has to meet national supply, but with a commercial bend, will not bring in products or they are going to sell at a loss,” he said.
He noted: “We need to free the marketers to do their business. To do their business, we need to address the pricing issue. One model, for example, is at the time we got the approval of N145, the exchange rate was N285 to $1. Today, it is N305. So, even at the minimum, there’s a gap. One mechanism will be to work with the Central Bank of Nigeria in terms of exchange rate mechanisms.” Read more