Fuel Subsidy: NASS Backs Down On Probe

By Uchechukwu Ugboaja

The Senate Chairman on Petroleum Downstream Sen. Kabiru Marafa has stated that the National Assembly will not be looking into the issue of fuel subsidy but rather focusing on the remote and immediate causes of the fuel scarcity that Nigerians had to grapple with during the yuletide.

The joint committee of the Senate and House of Representatives on Petroleum Downstream was forced to cut short their holidays as they convened to look into the perennial issue of fuel scarcity at critical times of the year when Nigerians were expecting to enjoy unfettered movement.

Most Nigerians including members of the media were eagerly expecting the Committee to look into the issue of Fuel Subsidy which was reported widely when Vice President Yemi Osinbajo stated that it is the NNPC and not the Federal Government who was bearing the cost of fuel subsidy during one of his visit to Lagos in December.

However the Hon. Min. of State for Petroleum Dr. Ibe Kachukwu went straight to the heart of the issue as he cited several factors that actually led to the crisis. According to him independent marketers had stopped importation because of cost of landing and exchange rate differentials.

The system didn’t foresee this challenges ahead of time,

He also stated that the failure to move the products with the required technology to avoid he diversion of products had also contributed greatly to the crisis.

“The business model in terms of whether NNPC can import 100% what the country needs is also very crucial to note as it is becoming clear that it cannot be sustainable going forward.

“We have kept the prices above 60dollars and sometimes when the price escalates in the international level affects us and the president has set up the benefits.”

Speaking about the government’s plan to build refineries, he claimed that the government will finish some of our refineries in 2019, and remains focused on the futuristic reactions to ensure that we sustain the stability we have enjoyed in the industry over 2 years now. What this country needs is to have its own refinery, we cannot sustain this culture of exporting raw crude it is an obsolete approach to the dealing with issues in the sector.

The Group Managing Director of the NNPC, Maikanti Baru in his presentation said that there is no known plan by government to his knowledge that there is going to be an increase in pump price which had led industry unions to prepare for a strike.

Even though the strike was called off on the 18th the damage was already done as there were supply gaps which worsened the crisis. The issue of Price differentials between 145 and 345 is a huge incentive for black marketers who take advantage of the crisis.

According to him, our consumption is about 35 million litres a day and with those panic issues and also with information that went out seriously caused 3 out of 10 of our international consortium partners to reject our October cargos but we immediately assigned them to others which was eventually delivered to us at the end of the day.

When we had the issue with PENGASSAN we immediately went into the “fuel war room”. It involved all those involved in the distribution process which included the finance people PPPRA, DPR, including the security agencies.

We requested our oil majors and semi majors to roll out products on a 24 hours basis, the DPR was well on ground to ensure monitoring and apply sanctions where necessary, as well as intensify the activities of the NSCDC who identified a lot of stations that were specifically built to cash in on fuel scarcity.

Some of the sanctions we meted out to culpable vendors was immediate free dispensing to members of the public. NNPC has proof of diversion of these products nationwide.

The honourable Minister of State for Petroleum Dr. Ibe Kachukwu claimed that diversion of petroleum products was critical to the crisis, bad roads, lack of sufficient reserves in the system, supply gaps and then enforcement of sanctions is a problem.

According to the Minister, the NNPC had to look for emergency alternative cargos, and there was a lot of request for logistic supports during this time, and so we put up a 24 hours operations directive were demanded from marketers but going forward we are looking at an 18months futuristic plan to prevent this ugly situation again.

“Issue of enforcement has been key because it appears to be very lax in the country and these are economic sabotage to the country, so we have recommended that trackers should be placed on trucks that carry products.

“So if we deal with the price issue and enforcement as well as the business model to allow others import aside nnpc, and also deal with infrastructural issues such as failed pipelines which could within a jiffy to send products to the end users, we also needs to deal with our lack of enough refineries to refine our domestic consumption, this is not sustainable,” Kachukwu lamented.