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Nigeria will continue to fix fuel price despite NNPC’s transition to commercial entity

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Nigeria will continue to determine the price of fuel despite the transition of the Nigerian National Petroleum Company Limited (NNPC) to a commercial entity, according to its Group Chief Executive, Mele Kyari.

However, the NNPC would henceforth carry out the exercise for a fee on behalf of the Nigerian government.

In a prerecorded interview on Channels Television, Kyari stated that whereas before now the NNPC’s function of being the sole importer may not have been on a commercial basis, it would henceforth charge a fee for the service.

“In the case of the price of petroleum, this is a policy matter. And the NNPC is going to be a supplier to the Federation at a fee. So, the issue of at what price you sell petroleum will be the decision of the state.

“The state has continued to maintain that we must continue to pay subsidy on petroleum products. We are happy to do this, but as a commercial venture, we will have a service-level agreement between us to render that service,” he said.

The NNPC, which is expected to be officially unveiled by President Mohammadu Buhari on Monday was incorporated into a limited liability company as a result of the provisions of the Petroleum Industry Act (PIA).

The president recently deferred the full deregulation of the sector, which would have seen the removal of the controversial and opaque petrol subsidy, which the government has budgeted N4 trillion in this year’s fiscal policy document.

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But Kyari reiterated that it would no longer be business as usual, insisting that as a commercial venture, the NNPC would just be a service provider to the government, rather than shouldering the responsibility of importation and allowing it to hurt the company’s bottom line.

“We will procure the products and we will sell to the state and will be step on step with the country and literally, I’ve seen no indication at this point in time that the state is ready to change any price of petroleum products. It has nothing to do with our operations.

“For us, what it really means is that this is business for us. We’ll charge them a fee and at any point so that the company can make money on behalf of its shareholders,” he said during the interview.

Kyari, who also spoke on the new demands on the new NNPC explained that it would henceforth take the issue of transparency more seriously, having earlier joined the global Extractive Industries Transparency Initiative (EITI).

“More than anything else,  there’s really no plan of tying this (subsidy) to our turnover and they have no relationship,” he noted.

According to him, the new NNPC will not withdraw from the international organisation, but will rather continue to ensure more openness in its operations to attract more investments and foreign partnerships.

“Actually it now becomes more demanding to be more transparent. NNPC is a partner company for the global EITI initiative, like very many other private companies that voluntarily chose to become partner companies to the EITI.

“The meaning of this is that you’re going to make certain disclosures to your shareholders and to the world community that companies ordinarily are not required to do and we will keep to that because we’re not going to withdraw as a partner company to the EITI.

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