…as NMDPRC agrees with NCS on fuel consumption
The long-running controversy over the amount of Premium Motor Spirit (PMS), otherwise known as petrol, consumed in Nigeria on daily basis may continue until the end of the subsidy regime, recent developments have shown.
On Thursday, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) claimed that Nigerians consume about 66.89 million litres of petrol daily.
The move seen as an attempt to provide clarification on Nigeria’s actual fuel consumption figures, following varying figures making the rounds in recent times may have settled the issues as the figure is in agreement with the 68million litres announced by the Nigeria Customs Service (NCS) and contrary 98 million published by the Nigerian National Petroleum Company Limited (NNPCL).
As the actual daily petrol consumption remains shrouded in secrecy, the Comptroller General of Customs, Hameed Ali and the Group Chief Executive Officer of NNPCL, Mele Kyari had the previous week clashed over the matter, with the Customs’ boss challenging the figures being paraded for subsidy by the NNPCL.
Nigeria’s daily petrol consumption data has always been a subject of debate. As an importer of last resort, NNPCL due to the challenges in the downstream sector since 2017, has been the sole importer of petroleum products into the country.
There have been various government attempts in the past to curb the chaos and bring sanity to the fuel importation and distribution system which used to be largely in private hands. But they yielded little or no results.
Before this government came to power, daily fuel consumption was about 38 million litres, which the opposition APC alleged was inflated. But since coming to power, the figures have jumped from 38ml to 62ml and then to 98ml, prompting astronomical increase in the level of subsidy payment by government.
Indeed, there was rarely any administration before now that did not institute some kind of investigation into how the petrol subsidy system was administered nationwide. However, with the takeover of the NNPCL as the only importer, due among others, to the scarcity of foreign exchange, hopes were high that some level of sanity would be returned.
Historically, in 2012, the figures grew astronomically and inexplicably from below 30 million litres per day to almost 48 million litres during the subsidy regime where private fuel marketers were allowed to bring in the product.
While at the time, the number of importers was cumbersome, government found it almost impossible to manage, with various claims by the private importers to the government coffers. But with the takeover by the national oil company, the thinking was that the system would be better managed.
With the importation in the hands of the firm, the Minister of State, Petroleum Chief Timipre Sylva, last year boasted that part of the achievement of his ministry was the reduction in consumption and clarity around how many litres the country actually used daily.
However, in July the ad hoc committee of the House of Representatives investigating the country’s daily consumption of PMS summoned the NNPC boss to brief it on the matter. Also summoned were the Central Bank Governor, Godwin Emefiele, the Minister of Finance, Budget and National Planning, Zainab Ahmed, the Minister of State for Petroleum Resources, Timipre Sylva, the Customs boss among others.
The summon was issued after the officials shunned the initial invitation of the panel. The House had in January, resolved to investigate daily consumption following a motion moved by Hassan Fulata (APC, Jigawa).
Raising the dust
The Customs CG stirred the hornet nest last week when he expressed reservations over the figure released by the NNPCL, arguing that the national oil firm could not convincingly justify the huge volume of petrol being consumed in the country daily to warrant the over N6 trillion subsidy.
Speaking during a presentation to the House of Representatives’ Committee on Finance , Ali put the supply figure allegedly quoted by the NNPCL at 98 million litres per day, maintaining that the firm was over-supplying by at least 38 million litres daily. NNPCL has put the figure at 68 million litres.
“I remember that last year we spoke about this. Unfortunately, this year, we are talking about subsidy again. The over N11 trillion we are going to take as debt, more than half of it is going for subsidy. The issue is not about smuggling of petroleum products. I have always argued this with NNPC”, he said.
“If we are consuming 60 million litres of PMS (Premium Motor Spirit) per day, by their own computation, why would you allow the release of 98 million litres per day? If you know this is our consumption, why would you allow that release?
“Scientifically, you cannot tell me that if I fill my tank today, tomorrow, I will fill the same tank with the same quantity of fuel. If I am operating a fuel station today and I go to Minna depot, lift petrol and take it to Kaduna, I may get to Kaduna in the evening and offload that fuel. There is no way I would have sold off that petrol immediately to warrant another load. So, how did you get to 98 million litre per day? That is my problem,” he pointed out.
He added: “The issue of smuggling: If you release 98 million litres in actual and 60 million litres is used, the balance should be 38 million litres. How many trucks will carry 38 million litres every day? Which road are they following and where are they carrying this thing to?”
But in his reaction, the NNPCL GCEO, Kyari, through the Spokesman, Garba Deen Muhammad, stated that the company was prepared for any forensic audit if the need arose, maintaining that Nigeria’s estimated daily consumption at current price level remains at 60 million litres, while average daily supply between January and August was 68 million litres. It claimed that alleged over-supply was to avoid scarcity.
While not disputing that some fuel was smuggled out of the country on a daily basis, the NNPCL explained that about N297 is currently being paid as subsidy on a litre of the product, adding that if subsidy was removed, a litre of petrol would be selling for N462.
“NNPC limited also notes the average Q2, 2022 international market determined landing cost was $1,283/MT (Metric Tonnes) and the approved marketing and distribution cost of N46/litre.
“The combination of these cost elements translates to retail pump price of N462/litre and an average subsidy of N297/litre and an annual estimate of N6.5 trillion on the assumption of 60 million litres daily PMS supply. This will continuously be adjusted by market and demand realities,” the company stated.
It pledged to continue to ensure compliance with existing governance framework that requires participation of relevant government agencies in all petrol discharge operations.
The NNPCL listed the collaborating organisations as the Nigerian Ports Authority (NPA), the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Nigerian Navy, Nigeria Customs Service (NCS) Nigerian Maritime Administration and Safety Agency (NIMASA) and others.
Clearing the air
In a statement in Abuja on Thursday, the Downstream and Midstream petroleum sector regulator clarified that the 62.9 million litres daily fuel supply figure it quoted in interaction with legislators was the 2021 consumption figure that was used to forecast revenues for 2022.
It declared that the actual daily fuel truck-out data are published on its website, adding that it would continue to provide transparent data as regards Nigeria’s fuel supply and distribution.
The NMDPRA statement read in part: “The Federal Government Medium Term Expenditure and Revenue Framework (MTERF), which is a three-year forward-looking budgetary tool comprises contributions from various agencies. The authority and its legacy agencies annually provide truck-out forecasts for this planning purpose.
“The authority, during a recent interactive session with the House of Representatives Committee on Finance, quoted 62.9 million litres as the 2022 baseline daily truck out projection. For clarity, the figure provided was used in 2021 solely to forecast the expected revenue for 2022 and does not in any way translate to the actual truck out volume for this year.”
The cost of subsidy
Meanwhile, the Human Rights Writers Association of Nigeria, (HURIWA) has accused the NNPCL of shortchanging Nigerians. National Coordinator, HURIWA, Emmanuel Onwubiko, in a statement seen by Business Hallmark, backed the Customs CG and faulted the N6.34tn subsidy payment on PMS.
“It is no doubt that the NNPC is shortchanging Nigeria and Nigerians using vacuous and bogus subsidy claims because for now, it is not clear if any open and public records exist to show these details to allow for transparency and accountability which are the hallmarks of good governance”, HURIWA said.
“This is condemnable. It is particularly shameful that the regime of President Muhammadu Buhari and the All Progressives Congress failed Nigerians after criticizing past administrations over the failure to stabilise the production capacity of NNPC refineries to allow for home refining of crude oil.”
Similarly, the Director General of the Budget Office of Nigeria, Ben Akabueze, has said the trillions of naira spent on fuel subsidy could be deployed to other creative sectors, particularly education.
Speaking on Arise TV’s Global Business Report, Akabueze noted that fuel subsidies often had a huge impact on the economy and the lives of the people, stressing that “when you eliminate fuel subsidies or cut back on it, there will be an immediate impact on people.”
He blamed the absence of investments in the midstream sector of Nigeria’s oil & gas industry on the existence of petrol subsidies, stating that where price was not market-driven, investors would be reluctant to commit.
SOURCE: hallmarknews.com