NNPCL boss says 2022/23 fuel subsidies not yet funded; “We factored supply value-chain for new price”
The Group Chief Executive Officer of the Nigerian National Petroleum Corporation Limited (NNPCL), Mele Kyari, has said that the new petrol price announced by the company factored in dynamics in the supply value-chain.
In an interview on ARISE NEWS talk show programme, The Morning Show on Thursday, Kyari justified while speaking on the subsidy removal the immediate implementation disclosing that the 2022/23 fuel subsidies have not been funded by FG.
And doubling down on the argument that the subsidy aught to have been removed after June ending, he said it is one thing to have the money in the appropriation and another to back it up with finance. Again, he said the marketer in his next trip to replenish the product would buy at the new rate.
Kyari, said at the moment NNPC uses the official foreign exchange rate to import fuel but with the announcement of President Tinubu every one will roam with the single exchange rate market which would attract more players, foreign and local to import petroleum products.
Kyari said, “I’m sure you must have heard what Mr President said about exchange rate normalization, and that will simply mean that single exchange rate market for everyone. As we speak today, NNPC uses the official exchange rate, which of course will now be subject of the stabilization that will be created by the announcement of Mr President. We see this coming very soon and very shortly.
“Once that happens, everybody, including the NNPC will access the FX at the same rate, and of course, obviously when you have change of this nature it is always a transition. You will see this happening- a gradual exit of the NNPC in the official exchange rate, and of course, ultimately, there will be a single market rate which NNPC itself will be subject to.”
He then explained that this didn’t mean that fuel prices will go up with other petroleum players in the market, who may not be using the official exchange rate, as the NNPC is doing. He went on to say, “What this situation will do is it will also regulate consumption. When you have higher prices of commodities, very typical, you regulate your consumption and that means the volume of the product you are going to require will come down very very naturally. At least, my estimate is that probably about 30% of the volume of the consumption will come down.
“And I’ve continuously said over and over again that as we speak today now, there is no verifiable data to say the level of consumption in this country, but we know the evacuation from our depots, and that evacuation number will come down at least by 30%. If that happens, it also means collateral decrease in the requirement of FX in the market.
The same source of FX that NNPC has access to, all the market will have access. I know and I am aware of ongoing engagements to ensure that everyone has access to that single window market for the FX. Once that happens, you will not see any spiral, you will not see any change that is significant, it will not happen.”
