TheCable

Mele Kyari, group chief executive officer (GCEO), Nigeria National Petroleum Company (NNPC) Ltd, says the petrol pump price of N170 per litre is no longer realistic.

Kyari said this on Wednesday while delivering a keynote address at the legislative transparency and accountability summit organised by the house of representatives committee on anti-corruption.

The statement comes on the back of the current petrol scarcity being experienced across the country.

Speaking at the summit, Kyari said selling petrol at N170 was no longer sustainable.

He said market conditions have pushed the cost of landing cost to about three times the value of the current pump price.

“It is not possible for you to buy fuel at N170 when your actual cost is thrice that value,” he said.

“For instance, today, when PMS comes into this country, we transfer to marketers at N113 per litre for us to ensure N165 at the pump.

“So, you must sell at N113 to them to be able to deliver at N165, that means whatever the cost, anything after that value; that is subsidy. Somebody has to pay for it.

“Everyone knows the price of PMS around the world. There is nowhere today that you can land a litre of PMS to the pumps at the N445 (to $1dollar) exchange rate. It is not possible.”

The NNPC GCEO also said the subsidy cost for petrol is about N290 a litre in some parts of the country.

According to Kyari, subsidy costs gulps about N19 billion a day, using the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) latest consumption figure of 66.8 million litres per day.

He said with the current subsidy on petrol, vices including document forgery and cross-border smuggling, were inevitable.

“In some places, you are subsidising up to N290 on every litre. With this regime, it is impossible for you to avoid all the wrong things that are happening – round-tripping, cross-border smuggling, document forgery,” he said.

“Anywhere you have arbitrage, you will have these issues. As long as arbitrage is there, you will continue to have these issues and you cannot hold NNPC accountable for it because it is a value chain that involves everything and everybody.

“You cannot price it at the market today because of the socio-economic impact on the prices of PMS. Every country is doing something about high energy costs.

“Some have removed taxes on petroleum; this is a subsidy. NNPC Limited will no longer go to FAAC because we are expected to pay taxes, dividend and royalty.”

TheCable had reported that NNPC spent N2.565 trillion on petrol subsidy payments since the beginning of the year.