By Lateef Adegbite& Elizabth Chukwuma
Barely six months after President Bola Ahmed Tinubu bowed to pressure from Ajay Banga, President of the world Bank and the International Monetary Fund, IMF, including other Multi-lateral Financial Institutions and the London Club and Paris Club, the world Bank/IMF, are back again.
The global Financial Institutions which had caused great hardship to Nigerians with the increased cost of transportation due to the rising cost of fuel at the filling stations blamed on the fluctuation in the foreign exchange market had said that the product should sell at N750.00 per litre instead of the present Nigerian National Petroleum Corporation, now baptised Nigerian National Petroleum Company, NNPCL, with the passage of the Petroleum Industry Bill, PIB, by the National Assembly , passed into Law by former President Muhammadu Buhari in August,, 2021.
Alex Sienaert, of the World Bank’s lead Economist in Nigeria, the most populous country in the African Continent may have spoken the mind of Banga, the global Bank President during his recent presentation of the country’s development update report , December 2023, edition, that the when he stated that petrol prices in Nigeria ae not yet fully cost -reflective of what it obtains in the international oil market, meaning that the product is still been subsidised by the Nigerian government which was not good enough for the economy.
He had enjoined he government to take additional bold steps to completely stop the fuel subsidy to safeguard the benefits of the earlier economic reforms that had removed the fuel subsidy and unification of the official and parallel, popular black market exchange rates.
Sienart , the World Bank lead Economist was said to have made it clear to those that cares to listen that the petrol prices in Nigeria are really adjusting to the market conditions as obtained in other fuel importing nations which clearly shows that the Nigerian government is still subsidising fuel importation into the country to sell at the he N650.00 per litre at the filling stations.
The argument in the World Bank/IMF circles was that the NNPCL, could fix the price of the product at N650.00 per litre because it is importing the product at the prevailing official rate of a little above N900. 00 to the North American country of the United States, US, dollars the nation’s seaports. in calculating the import duties by the Nigerian Customs Service, NCS.
Mele Kolo Kyari, Group Managing Director, GMD, NNPCL, may have alluded to this when he told the Senate Committee on Finance recently that the Independent Petroleum Products Marketers withdrew from the product importation because they could not manage the challenges of price fluctuations in the downstream sector because of the floating of the naira in the forex market.
He had said that that the company has no option but to fix the price of the product because it has remained the sole importer as the Independent Petroleum Markers, Association of Nigeria, IPMAN, and the Depots and Petroleum Marketer Association, have opted out of importation, citing volatility in the forex market, which they ad deemed detrimental to their profitability and survival.
The NNPCL Chief Executive Officer, CEO, who could not hide his feelings, who had repeatedly said that the oil marketers opted out of importation because they can’t manage the reconciliation and responsibility that the nation’s Petroleum Industry had imposed on them, stressing that they have the market and they are managing it. He had said that some the products marketers are buying from them at the fixed price and sell. He noted that the price of the petrol, particular, may have been fluctuating in different parts of the country because there is an element in the chain of distribution that it cannot effectively control. He had cited the truck owners who can adjust their prices, stating that NNPCL, do not have control over that. He had said that NNPCL paid into the Federation Account N.5 million from the sales of products to marketers.
Only recently, the NNPCL, confirmed that 18 ships laden with petrol and other products arrived at the Lagos port to ensue availability of the products this Christmas period. The massive importation of the petroleum products had come at a time when there was a recent emergence of long fuel queues in in some parts of the country including Abuja, the Federal Capital Territory, FCT, Nasarawa and Niger, which the NNPCL, had blame on the price war between the marketers. The later would not take it as they had blamed the return of the queues at filling stations on fuel supply shortage.
Kyari, the NNPCL, helmsman is optimistic more players will enter into the petrol importation market by the end of the first quarter of 2024, that would force down the price of the product as against the N750.00 per litre being proposed by the World bank as the margins between the official and parallel market exchange rates narrows.
He may have shocked Nigerians when he disclosed that he expected return of the refurbished PortHrcourt or Warri refineries into production of petrol, Automotive Ga oil, popular, diesel, Dual Purpose Kerosene and Aviation fuel, between this month December and 2024, would not guarantee a potential drop in the pump price of the products because it is not the main objective of the refineries, meaning that the pump price of petrol would remain the n650.00 per litre or more.
He had said that that the target of the refurbished refineries and the private refines which include that of the Dangote 650,000b/d refinery and Petrochemical plant is to make Nigeria a ‘’net export of petroleum products to earn forex for the country.
Already, Dangote refinery Management had stated that it will commence production and sale of diesel and Aviation fuel in January 2024. The company had said that the production of the popular petrol may be delayed due to crude oil supply instalments. According to an insider the refinery requires a minimum of six million barrels of crude oil to begin full production of refined petroleum products such AGO, PMS, JET AI, and Dual-Purpose Kerosene, DPK, known as kerosene.
The refinery was said to have so far received one million barrels expected to arrive in five installments of five weeks. Exxon Mobil, Aliko Dangote, President Dangote Industries had said will provide the final shipment of the six expected shipments for the $19 billion refinery.
He had said that the initial shipment of one million barrels which marked the commencement of the six million barrels of crude oil to be delivered to the refinery by the various suppliers including NNPCL, is expected to support the initial processing capacity of 350,000b/d at the facility.
