…as FG seeks to encourage local refiners
The severity of the impact of crude oil theft on the Nigerian economy is coming to the fore once again, as Ngozi Okonjo-Iweala, Director-General of the World Trade Organisation (WTO) says, “all Nigerians must agree that stealing of our national assets of any type is intolerable and must be stopped”.
This is against the background of moves by the Federal Government’s committee which was set up to ensure the implementation of crude oil sales to local refineries in naira, to further discuss the pricing of petrol, to be released by the Dangote Petroleum Refinery next month.
Multiple officials among oil marketers and members of the Implementation Committee on crude oil sales in naira, under the leadership of the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, confirmed that the panel would be holding a series of meetings this week and in coming weeks on the development.
It has been said that stemming crude oil theft will shore up the economy and create a greater allowance for allocations to local refineries.
Meanwhile, Okonjo-Iweala further attests that there are enough technological innovations to track crude oil theft and bring those behind the act to justice in Nigeria.
Speaking at the opening ceremony of the 2024 Annual General Conference of the Nigerian Bar Association (NBA) at the Eko Hotel & Suites in Lagos on Sunday, Okonjo-Iweala said those responsible for stopping the “intolerable” action of crude oil theft no longer have excuses.
The Nigerian Extractive Industries Transparency Initiative (NEITI) says the country lost a whopping 619.7 million barrels of oil valued at N16.25 trillion to theft between 2009 and 2020.
The agency added that between 2009 and 2018, the country also lost 4.2 billion litres of petroleum products from refineries valued at $1.84 billion.
Multiple oil industry officials say that the Federal Government’s Committee set up to ensure the implementation of crude oil sales to local refineries would put a benchmark on the amount that the Dangote refinery would pay for crude in naira and that the Federal Government would have to decide whether to pay subsidies for petrol from the plant or to allow Nigerians buy the product at the market price.
However, oil marketers declared that the cost of Dangote petrol would be higher than the current pump prices of the commodity, stressing that it would be tough for dealers to buy the commodity from the plant if the Federal Government fails to intervene in the price, the Punch reports.
Petrol sells at between N600 and N700/litre depending on the area of purchase across the country. The landing cost of the commodity, according to data released by the Major Energies Marketers Association of Nigeria recently showed that the cost of petrol was N1,117/litre.
Marketers say this is the actual market price of the commodity and explain that the cost of the product from the Dangote refinery should be around this figure.
The Nigerian National Petroleum Company Limited is the sole importer of petrol into the country. Other marketers stopped importing the commodity due to their inability to access US dollars required for petrol imports.
But last week at the presentation of the audited report and accounts of NNPC for the 2023 business year in Abuja, the firm’s Chief Financial Officer, Umar Ajiya, admitted that the oil firm was shouldering a heavy subsidy burden on petrol imports, the Punch reports.
Ajiya said the NNPC had been making PMS available for retail distribution at about half of the landing cost under an agreement with government.
He explained that the company had been offsetting the shortfall in landing price and sale price through a reconciliation arrangement between the government and the company. He said the company had not paid any money to any marketer in the name of petrol subsidy in the last eight to nine years.
While the official pump price of petrol is about N600/litre, the average landing cost is about N1,200/litre. Ajiya said the company covered about N7.8tn in “shortfall” in the first seven months of this year.
“I think there is one fact that I need to make very clear, in the last eight or nine years, this company, even as a corporation as it were, has not paid anybody a dime or one naira as subsidy.
“No one has been paid a kobo by the NNPC in the name of subsidy. No marketer has received money from us by way of subsidy,” Ajiya said.
He said the government directs NNPCL to sell the petrol it imports, at a price that is half of the landing price. According to him, at times the Federal Government pays the money and it could as well net off for it.
“What has been happening is that we have been importing PMS, landing at a certain price, and the government is telling us to sell it at half price. So, that gap between that landed price and the half price is what we call shortfall or we call it a subsidy,” the CFO explained.
On August 20, 2024, The Punch reported that the Federal Government’s committee which was set up to ensure the implementation of crude oil sales to local refineries in naira has reached an agreement with the Dangote Petroleum Refinery for the rollout of petrol in September this year.
The Federal Government also disclosed that the sale of crude oil to Dangote Refinery and other local refineries will commence on October 1, 2024.