Why NNPC imports fuel, by Kupolokun
From Saxone Akhaine,
Kaduna
DESPITE the huge expenditure of about N645 billion ($485 million) the Federal Government has incurred in the rehabilitation of the nation's four refineries, the domestic demand of 30 million litres of fuel supply per day cannot be met by them.
This is because refineries can currently only produce 17 million litres of Premium Motor Spirit (PMS) when all four are producing at full capacity.
The Group Managing Director, Nigerian National Petroleum Corporation (NNPC) disclosed this yesterday at an enlightenment forum organised by the National Orientation Agency (NOA) in Kaduna.
According to him, NNPC is compelled to import the short-fall of 13 million litres of the product, since with the rising number of vehicles, especially imported fairly used ones, the demand for PMS would definitely rise.
Kupolokun lamented that despite this prevailing situation, there were no new refineries being built in the country, with the youngest among the existing ones being about 18 years old.
He stated that since September 2003, NNPC had been competing with other international oil companies in the importation of fuel at the world market.
He said that President Olusegun Obasanjo had told the corporation that there would no longer be any subsidies, and this left the NNPC to buy crude oil at the international price.
He said: "Right now, we buy crude oil at $45 per barrel and with crude oil prices going up at the world market. Prices of the products will also go up. In fact, right now, PMS is sold for more than a dollar per litre in the U.S. and Britain."
Kupolokun disclosed that the Turn Around Maintenance (TAM) carried out on the refineries had been completed and the NNPC was awaiting the crude line to become operational for them to perform effectively.
He was hopeful that with the participation of the private sector, the nation's oil needs would be met with ease.
Kupolokun further said that the oil sector needed to be liberalised if the corporation must be saved the same fate that befell the Nigerian Railway Corporation.
He stressed that liberalisation would create more jobs and a competitive environment in the Oil sector of the economy.
Insisting that Nigeria could not operate in isolation of the world market, Kupolokun noted: "We must therefore follow world trend of liberalisation. If you want to operate as a refinery you should liberalise the market.
"In the past, the refineries were on their own, but now, they will have to compete against each other, they are now running better than they used to."
Also speaking on why the NNPC could not utilise the excess crude proceeds to subsidise imports, the NNPC boss remarked: "That will lead to going back to the basics and price fixing which will prevent consumers from benefiting".
The Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Oluwole Oluleye, stated that the NNPC had over the year sold its products at far below the landing price.
According to him, the corporation loses about N500 million daily for selling petroleum products below landing cost, which he put at N54 as at August 9, 2004.
In attendance at yesterday forum were the Kaduna State Governor, Alhaji Ahmed Makarfi, and NOA director, Alhaji Idi Farouk.
