The Nigerian National Petroleum Company Limited (NNPC) has assured Nigerians that fuel queues in filling stations, following the affirmation of the removal of subsidy, will soon vanish.
Mele Kyari, the Group Chief Executive Officer (GCEO), briefed State House correspondents after meeting President Bola Tinubu on Tuesday at the Presidential Villa, Abuja.
Tinubu, in his inaugural speech on Monday, commended the past administration for phasing out the petrol subsidy regime, which had increasingly favoured the rich more than the poor.
Kyari said that the Petroleum Industry Act (PIA) stipulated that the price of petroleum should be determined by market forces.
"I know all of us must have seen the fuel queues in filling stations across the country.
"It is very understandable that whenever announcements to changes to prices of petroleum happen, both buyers and marketers will like the assurance of what exactly this means and typically, consumers will rush to the filling stations to fill their tanks and that is why you are seeing these queues.
"Also, the marketers will like to see exactly what this means in terms of how are we going to sell the products if the subsidy on PMS is removed.
"And the combination of the two is what you are seeing - the obvious dislocation on distribution and we believe that this will go away very quickly.
"And as you may be aware, PIB which was accented in 2021 and became an Act, made it clear that the price of petroleum must be priced at the market," Kyari stated.
He said, however, that the government also decided to provide for subsidy in the 2022 Appropriation Act and also for a half year in 2023.
According to him, while the PIA is clear that petroleum should be priced, but it did not say that government cannot put its money in any way it wants.
"Therefore, we, as a commercial company established by the PIA, are doing it strictly as a business; delivering value as a supply of last resort by virtue of the law but at a cost to the federation.
"And that cost includes the cost of subsidy; this subsidy cost should have been money that will be given to the NNPC, maybe on a monthly or daily basis.
"However, since the provision of the ₦6 trillion in 2022 and ₦3.7 trillion in 2023, we have received no payment whatsoever from the federation; that means they are unable to pay and we continue and continue to support the subsidy from the cash flow of the NNPC."
He also explained further, "That is when we net off our physical obligations of taxes and royalties, there is still a balance we are funding from our cash flow and that has become very difficult, and it affects our other operations.
"We cannot keep some of this cash to invest in our core businesses and the result is that it can be a huge challenge for the company.
"And we have highlighted this severally to government; that they must compensate NNPC; they must pay NNPC for the money we have spent on subsidy."
The NNPC Ltd boss said that by virtue of the law and the Appropriation Act 2023, funding was no longer available while the country could no longer fund the subsidy and was no longer able to pay NNPC.
"Therefore, we are pleased to note the president’s commitment to the removal of subsidy because they cannot afford it anymore.
"And we will take necessary steps to ensure that we recover our cost from the market and also be mindful that situations like this can lead to exploitation of customers.
"And we are working with the regulator who is here with me to see how we can cap such excessive management of greed to say the least," Kyari said.
"And this will be contained by virtue of the provisions of the law; the Nigerian Midstream and Downstream Regulatory Authority (NMDPRA) and the competitor agencies will play their part.
"We believe very strongly that this is actually belated; we have been doing subsidy that has no significant value to the rest of the federation and the rest of our countrymen.
"And we think this is a very commendable step taken by the president to bring into effect the provisions of the law," he added.
On his part, Farouk Ahmed, the Chief Executive of NMDPRA, said that the pronouncement by the president was in tandem with the law.
Ahmed said prospective importers who met the criteria would be licenced to import fuel to ease pressure on NNPC.
He said that efforts were underway to make sure that consumers were not exploited.
"We also understand the provision of the law that provided for the removal of subsidy from February 2021; therefore, the president’s pronouncement yesterday was in line with the law.
"However, what I can assure is that we are ready to license anybody who wants to import because NNPC has always been the supplier of PMS.
"However, with the removal of subsidy as pronounced by the president that opened the floodgate for any intending marketer that wants to import PMS, we are ready to issue licences for them to do; at least that will open up competition and of course, there will be less burden on NNPC.
"I also want to assure the general public that NMDPRA and the Federal Competition and Consumer Protection Commission will make sure that consumers are not taken advantage of," he said.