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HomeTop NewsNigeria suspends full deregulations of petroleum downstream sector, retain fuel subsidy

Nigeria suspends full deregulations of petroleum downstream sector, retain fuel subsidy

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… NNPC says no timeline for subsidy removal yet

By Samuel Bankole

Faced with stiff opposition from the labour union, the Nigerian government has suspended its deregulation policy on the country’s downstream oil sector, which was introduced last year in the wake of the sharp drop in global oil price.

Global crude oil prices have since recovered, forcing the government to revert back to the old order of subsidising the local consumption of fuel, as labour unions resisted attempts by the government to further adjust the pump price of fuel to reflect crude oil prices.

The NNPC imports the bulk of petrol consumed in the country since many marketers have shown less interest in the market due to the controversy that heralded subsidy payment in the past by the government.

Nigeria announced the deregulation of the downstream sector in March last year, taking advantage of low crude oil prices in the international market.

However, with the rising prices of global crude prices, the pressure has been on the government to sustain the deregulations policy, but opposition from the public and labour union has forced the government to halt the policy.

Speaking with State House correspondents after a visit to President Mohammadu Buhari, the Group Managing Director of of the National Petroleum Corporation (NNPC), Mele Kyari said that there is no timeline for the full deregulations of the downstream oil sector.

“I have no update in hand now, this (deregulation) is beyond me, but we are engaging to make sure we have the right timeline,” Kyari said while responding to question from state house correspondents after a visit to the President.

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“Subsidy is a policy matter, I am sure you are aware of this, there are engagements going on within government to get the best framework for having a fully deregulated PMS market.

“As this is going on, we are engaging all parties and all stakeholders as government and to make sure that at the end of the day, there is an exit that is beneficial to the ordinary man. “That is why we know we will not be able to complete that in the month of May and, therefore, we declared that there will be no increase in fuel price,” the corporation chief executive said.

Fielding question on the increasing market price of crude oil to about $67 per barrel and how it had impacted on NNPC finances, being the major importer of the product, he said there was no cause for alarm.

“You know it works both ways. Once prices increase, your revenue also increases. So I don’t have any numbers around it, but I also know that your obligation to price of petroleum increases and your net revenue also increases.

There is a balancing factor, I don’t think there is anything much to worry about,’’ he said.

On the fuel queues that surfaced in Abuja and adjoining states on Monday, the GMD explained that the queues were a result of the industrial action embarked upon by petroleum tanker drivers against their employers, the National Association of Road Transport Owners, NARTO, on compensation package which made them to suspend loading of petroleum products at the depots.

Kyari said the disagreement had been sorted out, following the intervention of NNPC, adding that normal loading operations had commenced from the depots.

He also said government had embarked on engagements with relevant stakeholders to get the best framework to have a fully deregulated Premium Motor Spirit (PMS).

“These queues will go away. It is because there was an industrial action by petroleum tanker drivers against their employers, the National Association of Road Transport Owners around their compensation package.

“Those issues were not resolved up till yesterday (Monday), until we intervened to ensure that there is an amicable settlement between the parties so that they will have peace and then normal loading operations will commence from the depots.

“As I speak to you at this moment, loading has commenced in all depots in the country, dispatches of trucks are ongoing in all the depots in the country and they have called off the strike for a period of one week to enable us intervene and find a solution. So there is really nothing fundamental that is happening now.’’

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