Reps grill NNPC, NMDPRA, marketers over rising petrol, diesel, gas prices

House of Reps
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The Federal Government has said it regrets that the petroleum refineries are not working while ruling out the possibility of introducing subsidies on Automotive Gas Oil.

It stated that it could not afford the payment of subsidies on diesel. The Chief Executive Officer of the Nigerian National Petroleum Company Limited, Mele Kyari, made this known in Abuja on Tuesday.

The House of Representatives’ Committee on Downstream had summoned stakeholders in the oil and gas sector to an investigative hearing over the scarcity and rising prices  of Premium Motor Spirit (petro), AGO also known as diesel, and Liquefied Petroleum Gas (cooking gas) in the country.

Those grilled by the lawmakers were Kyari, who is the Group Managing Director of the Nigerian National Petroleum Company; and Chief Executive Officer, Nigerian Midstream and Downstream Petroleum Regulatory Authority, Farouk Ahmed, among others.


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In his presentation, the CEO of the NMDPRA suggested three measures to be taken to address the challenges with the supply and distribution chain.

He said, “The required amount of forex for importation of the petroleum products (should) be made available to the genuine importers at CBN official rate.”

Ahmed also said the government should “encourage the establishment of more local refineries and LPG processing facilities to meet domestic demands,” adding that an increase in the LPG supply from major domestic producers, including NLNG, BRT processing, CNL, LPG, FSO,” would resolve some of the issues.

The NMDPRA stated that in addition to the three suggested solutions, “an extensive consultation is required amongst key stakeholders towards lessening the present tension being generated by the global high oil prices.”

Ahmed said, “Presently, Nigeria is a net importer of refined petroleum products, including AGO, as the country imports about 100 per cent of AGO consumed locally. An average of 12 million litres is also being consumed daily based on the average truck-out quantity.

“The upswing in international price, combined with the prevailing naira/US dollar exchange rate contributes about 80 per cent of the product price at the pump. While the official naira/US dollar exchange rate has remained relatively stable at about N415/US dollar since the beginning of the (Russia-Ukraine) war to date, the parallel rate on the other hand has increased considerably.

“The challenge with this is that petroleum products importers are unable to access the required amount of Forex at the official rate and therefore rely on the parallel market to complement their forex US dollar requirements.

“In addition, the monitored price of AGO currently ranges between N710/litre and N750/litre in the coastal areas, while the LPG price is about N800/kg.”

 When asked to be specific on the immediate solution, he stated that the respite to cushion the effect of high price is to make foreign exchange available for marketers to import AGO at the official exchange rate of N415 to a dollar.

Representatives of oil marketing bodies, the Independent Petroleum Marketers Association of Nigeria, the Depot and Petroleum Marketers Association of Nigeria, and the Major Oil Marketers Association of Nigeria, in their separate presentations, demand government intervention regarding forex, while expressing hope that functional refineries would resolve some of the issues.

The CEO of the NNPC, however, faulted some of the suggestions from the NMDPRA and the marketers.

Kyari said, “In our country today, we do not produce AGO and we regret that our refineries are not working. Are we doing anything about it? Yes. I have heard the honourable members lamenting. Yes, they are not working. This is the truth. I don’t want to bore you with why they are not working, but they are not working. I admit they are not working but we regret it.

“I will invite this committee at your convenience to join us to see how much work we have done to get them back to work, but they will not come back tomorrow. They will not! You cannot start it tomorrow. We regret this; we regret this situation and we are doing everything possible.

“As a matter of fact, we have decided to do a quick fix for the Warri refinery. The reason is very simple: we don’t even want to go the long route of doing comprehensive turnaround maintenance because we are concerned.”

The NNPC boss disclosed that Saudi Arabia’s Aramco recently bought a large amount of AGO and stockpiled it. “We were very surprised that Saudi Arabia would do this. No one knows what will come tomorrow. No one can guarantee the security of supply. That is why people are resorting to self-help. People are preserving the excess volumes that they have,” he said.

Kyari stated that the Central Bank of Nigeria and the Governor, Godwin Emefiele, might not be able to provide forex intervention.

“There is a limit to what he can do because as long as we are not productive; the only way you can cover FX gap is for you to go and borrow FX. And no one is going to lend you money to put on a subsidy; it does not happen anywhere in the world. No bank will lend you FX to go and put it into consumption.

“When Nigerians living in the Diaspora used to be a very great source of forex. They can no longer send back because many of them are out of employment. So, they can no longer send money even to their parents. So, you cannot have it in your banking system,” he stated in part.

The NNPC boss stated that the first step was to restore crude oil production. He noted that the current crude production, including condensate, is 1.4 million barrels while the budget level is 1.8 million.

He added, “So, we can’t meet it today. It is not possible. Today, we have over 205 illegal refinery sites. There are over 295 insertions on our crude oil production line. No oil company will continue to work; they will have no necessity or obligation.”

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