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Fuel price hike inevitable, says Kyari

… as subsidy hits N120bn monthly
Landing cost now N234 per litre

Nigerian National Petroleum Corporation (NNPC) has declared that it loses over N120 billion to fuel subsidy monthly, maintaining that an increase in pump price of fuel is inevitable. Group Managing Director of NNPC, Mele Kyari, who said this at the weekly media briefing at the Presidential Villa, yesterday, maintained that the current landing cost of fuel in the “country as at today (Thursday) stands at N234 per litre while the recommended retail price is N162 per litre.”

He added that the daily volume of fuel consumed in the country was 60 million litres. By this calculation, the NNPC is actually paying N129.6 billion as differential between the actual cost and recommended retail price monthly even when the GMC refrained from calling the balance a subsidy.

However, late last year, oil marketers, had expressed surprise over the resurfacing of petrol subsidy as regularly disclosed by the corporation. According to marketers of petrol, the government had, since March last year, declared that the downstream oil sector had been deregulated and as such there was no need for petrol subsidy.

The Independent Petroleum Marketers Association of Nigeria and the Petroleum Products Retail Outlets Owners Association of Nigeria disclosed in a news report in Abuja that they had not received any subsidy payments from government. Kyari, at yesterday’s briefing, however, said that the corporation may no longer have the capacity to continue to shoulder the differences and, as such, would soon have to shift it to the consumers.

Meanwhile, the NNPC also announced an increase of 80.12 per cent in trading surplus for the month of December 2020, which stands at N24.19billion compared to the N13.43billion surplus recorded in November 2020. This is contained in the December 2020 edition of the NNPC Monthly Financial and Operations Report (MFOR), according to a statement by the Group General Manager, Group Public Affairs Division of the corporation, Dr. Kennie Obateru. Trading surplus or trad-ing deficit is derived after deduction of the expenditure profile from the revenue in the period under review. According to the report, the operating revenue of NNPC Group in December 2020, as compared to November 2020, increased by 33.44 per cent or N137.00 billion to stand at N546.65 billion.

Similarly, expenditure for the month increased by 27.54 per cent or N112.81 billion to stand at N522.47 billion for the December 2020, expenditure as a proportion of revenue is 0.96 as against 0.97 in November 2020. The report indicated that the 80.12 per cent increase was due mainly to the significant rise in the profit of NNPC’s flagship upstream entity, the Nigerian Petroleum Development Company (NPDC), amid improved market fundamentals and strong global demand for crude oil. Other contributory factors to the robust trading surplus recorded in the month under review include the improved performance by the Nigerian Gas Marketing Company (NGMC), the Petroleum Products Marketing Company (PPMC), the National Engineering and Technical Company (NETCO) and Duke Oil Incorporated, which recorded noticeable gains in their operations.

In the downstream, 2.26 billion litres of white products were sold and distributed by PPMC in the month of December 2020 compared to 1.72 billion litres in the month of November 2020. This comprised 2.254 billion litres of petrol, translating to 72.72 million litres/ day, 11.40 million litres of Automotive Gas Oil (diesel) and 0.48 million litres of kerosene. Total sale of white products for the period of December 2019 to December 2020 stood at 18.456 billion litres and petrol accounted for 18.325 billion litres or 99.29 per cent.

In monetary terms, the volume translates to a value of N288.77 billion recorded on the sale of white products by PPMC in the month of December 2020 compared to N226.08 billion sales in November 2020. Total revenues generated from the sales of white products for the period December 2019 to December 2020 stood at N2.217 triilion, where petrol contributed about 99.09 per cent of the total sales with a value of N2.197 trillion.

In December 2020, 43 pipeline points were vandalized, representing about 18.60 per cent increase from the 35 points recorded in November 2020. Mosimi Area accounted for 56 per cent of the vandalized points while Kaduna Area and Port Harcourt accounted for the remaining 33 per cent and 12 per cent respectively. In the gas sector, natural gas production in December 2020 stood at 213.34 billion cubic feet (bcf), translating to an average daily production of 6,881.83 million standard cubic feet of gas per day (mmscfd). The daily average natural gas supply to power plants increased by 3.52 per cent to 816mmscfd, equivalent to power generation of 3,445MW. Out of the 208.61BCF of gas supplied in December 2020, a total of 146.72BCF was commercialised; consisting of 42.90BCF and 103.82BCF for the domestic and export market respectively.

This translates to a total supply of 1,383.93mmscfd of gas to the domestic market and 3,349.00mmscfd of gas supplied to the export market for the month. This implies that 70.33 per cent of the average daily gas produced was commercialized while the balance of 29.67 per cent was re-injected, used as upstream fuel gas or flared. Gas flare rate was 6.80 per cent for the month under review (i.e. 457.25 mmscfd) compared to average gas flare rate of 7.15 per cent (i.e. 538.59 mmscfd) for the period December 2019 to December 2020. The 65th edition of the NNPC MFOR highlights the corporation’s activities for the period of December 2019 to December 2020.

In line with the corporation’s commitment of becoming more accountable and transparent, the corporation has continued to sustain effective communication with stakeholders through the MFOR which is published on corporation’s website, national dailies, as well as independent online news portals.

 

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