NNPCL GMD, Mele Kyari
The group chief executive officer (GCEO) of Nigeria
National Petroleum Company Limited (NNPCL), Mele Kyari, has disclosed
that President Bola Tinubu has ordered the putting in place of
palliatives to cushion the effect of removal of fuel subsidy on
Nigerians.
Speaking after meeting behind-closed doors with members
of the National Working Committee (NWC) of the ruling All Progressives
Congress (APC) at the party’s national secretariat in Abuja, on
Thursday, Kyari confirmed ongoing rehabilitation of the nation’s four
refineries, saying one of them will start operations this year.
“There is an ongoing process of rehabilitation and one
of the refineries will come on stream this year. The second will come on
stream next year and the third will come in 2025,” he stated.
He also insisted that there was no going back on subsidy
removal, as it was quite apparent that Nigeria can no longer afford the
subsidy payment.
The NNPCL boss, however, said the NNPCL won’t continue to be sole importer of oil in the country.
Kyari stated: “There is a gradual process now of making a
flexible and single effect regime. Everyone will be able to have access
to foreign exchange and there is a transition going on now.
“And NNPC cannot continue to be sole importer. We know that this is going to vanish and the market will stabilise this.”
Noting that the country can no longer sustain the subsidy regime, the GCEO said subsidy bills have piled up.
He stated: “The country is not able to settle NNPC for
the money we are spending on the subsidy. Therefore, pricing this
petroleum at the market is the right thing to do at this time. We
believe that this will benefit the overall country in the long run and
in a long term.
“I am aware that Mr President has directed some
engagement and some palliatives will be put in place, and I am very sure
this will happen.”
Kyari further said while there was provision for subsidy
in 2022, not a single Naira was provided to finance the subsidy in
2023.
He continued: “And ultimately, while we held back our
fiscal obligations, we still have a net balance of over N2.8 trillion
that the federation should have given back to the NNPC.
“For any company, when you have negative N2.8 trillion,
there is no company in the whole of Africa that will lend to you. You
cannot have receivables. The provision of subsidy is there but
absolutely there is no funding for it. It means it is only on paper. So,
it doesn’t exist.
“So we no longer can bear it because of liquidity. If we
continue we will run into defaults and the defaults of NNPC is the
default of Nigeria. Once NNPC goes into defaults and liquidity, it
affects every borrowing done by the country. Even the sub-nationals.
Your lenders will come back to you and say your country can no longer
pay.”
On the benefits of subsidy removal, Kyari said when
President Tinubu declared in his inaugural speech that subsidy was gone,
the bond market appreciated within 24 hours.
Tinubu’s target, he pointed out, was to have 7 per cent
growth of GDP, which he said cannot be achieved if there is distortion
in demands and consumption patterns.
He added: “It is nothing else other than the statement
around subsidy and balancing of the apex market. These two elements are
major concern that every investor all over the world, every partner that
we have is worried about. What is your apex regime and how do you deal
with your subsidy?
“They know that this subsidy constitutes a huge amount
of money and this country may not be able to survive and pay its debts.
It is very clear that everybody understands this.
“Before today, the average subsidy level was N400
billion every month. That means every month you can do one major capital
project from money that you do not have. This is really what it means.
There is nothing anybody can do about it. There is this common argument
that the masses will suffer.
“That we are going to have problems with them. I agree.
That once you increase prices of this proportion, as it has happened, it
will have impact on inflation. There is no doubt about it. It is very
typical also, It goes up and down. The market determines what happens
next.”
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