The Chief Corporate Communications Officer of the Nigeria National Petroleum Company Limited (NNPCL), Olufemi Soneye, has said Nigeria’s foreign exchange policy is making it difficult for marketers to import petrol.
This is just as the President of the Trade Union Congress (TUC), Festus Osifo, identified the naira volatility as the reason for the high cost of petrol.
The federal government removed the multiple exchange rate regime, preferring that the Central Bank of Nigeria run a ‘managed float’ foreign exchange regime.
This has led to the country’s currency the ‘Naira’ exchanging for as high as N1, 500/$.
But notwithstanding the challenges, Soneye said the national oil company was still able to ensure supply of petrol because of its role as the last resort in the supply chain.
Soneye made the clarification in a statement ,Thursday, a copy of which was obtained by Blueprint in Abuja.
The clarification followed the view expressed by a former Lagos state Commissioner for Transport and Environment, Muiz Banire, (SAN).
The NNPCL image maker said rather than commend the company for its effort to stabilise petrol supply, Banire would rather prefer to make all kinds of ignorant and mischievous accusations.
Banire, had in an article in a national newspaper, claimed that the NNPC Ltd is the black hole of Nigeria, saying the oil Company was responsible for all the problems currently plaguing the country.
…Soneye explains
But in a reply, the NNPCL CCCO insisted that rather than blame the entity for the present situation, Nigerians should understand that the company’s critical role as supplier of last resort had helped mitigate the situation.
Soneye said: “Barely three months after the Federal Government announced the removal of fuel subsidy, it became difficult for both major and independent petroleum products marketers to import petrol because of the foreign exchange policy. They could not source forex to continue to bring in petrol. Since then, NNPC Ltd has been importing the product and selling at almost half price in keeping with the provisions of the Petroleum Industry Act (PIA) which designates it as the fuel supplier of last resort.
“Yes, there have been supply hiccups here and there because of the financial constraints imposed by the transaction. Just imagine the hardship the nation would have suffered if NNPC Ltd was not there to play the role of supplier of last resort! NNPC Ltd is the reason Nigerians continue to enjoy lower pump price for petrol than they would ordinarily pay for the product. How then does such a company become a black hole?
“Railing at the NNPC Ltd without a thorough understanding of the issues that threw up the current challenges in the oil sector, as most of the commentators have been doing, will yield no good for the country. At this critical intersection, the task for all well-meaning Nigerians should be how to find lasting solutions to the mischief in the oil sector and not to look for scapegoats, as Dr. Banire has done.
“The assertion that the NNPC is responsible for this state of affairs is moot. The policy of fuel subsidy is not the preserve of the NNPC. Various administrations over the years have thought it wise to subsidize the cost of petroleum products for citizens. They came up with different methods of doing that. The role of NNPC Ltd has been to implement the policy as decided by the government.
“At a point when the various administrations felt that the fuel subsidy policy had become a burden that should be done away with, they made it known. NNPC Ltd, as the national oil company, implemented it. This was the case in 2012 when the nation went up in protest against the government’s decision to remove fuel subsidies. The same scenario repeated itself in 2019 when the then administration came up with the policy to remove fuel subsidy. NNPC Ltd is neither responsible for the policy of fuel subsidy nor its removal.”
Speaking further, the NNPCL spokesman said Banire failed to look at the activities of smugglers, street urchins as being partly responsible for the situation.
He, therefore, urged the learned silk to do a little bit of research before making public his views.
He said, “given his level of educational accomplishments, he should have the capacity to research very well into the subject matters of their editorial interventions so that they do not argue, assert and progress in error(s).”
“For Banire, NNPC Ltd is responsible for everything that is wrong in the oil sector. He even blames smuggling and the unauthorized sale of petroleum products to street urchins who in turn trade it in the black market in jerrycans on the NNPC Ltd. But does he have evidence that the unpatriotic marketers who divert petroleum products meant for local consumption to neighbouring countries are staff members or representatives of the NNPC Ltd? Does he have any shred of evidence that the boys who sell fuel in the black market in jerrycans source their products from NNPC Retail Ltd.’s stations? The least one would expect from a lawyer of Banire’s standing is a fact-based and not speculative commentary,” said the NNPCL.
…Company’s growth
Priding the national oil company as growing, Soneye said: “The NNPC Ltd has turned a corner since 2018 when it began to prepare for the enactment of the Petroleum Industry Act, which was eventually passed into law in 2021. Apart from deepening its commitment to accountability and transparency by regularly publishing its audited annual financial statements, it has become a profitable company with an undisputable growth trajectory.
“It recorded an unprecedented N3.29 trillion profit in its recently released 2023 audited financial report. But this fact is conveniently lost on Dr. Banire who insists that he has not seen any difference between NNPC as a corporation and the commercially focused NNPC Ltd that was incorporated in 2021. Fortunately, it does not take Banire to see or believe that NNPC Ltd, as presently constituted, has broken away from its debilitating past for it to be true. He is not at home with the legal maxim: ‘Res Ipsa Loquitur’, meaning the facts speak for themselves,” he added.
Naira volatility
And featuring Wednesday on Politics Today, a Channels Television programme, TUC President Osifo stated that petrol would have sold far lower than the current price if not for the devaluation of naira.
Osifo , who is also the President of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), said with a weak naira, marketers continue to pay more to bring petrol into the country, thus leading to high prices of fuel.
He said the NNPCL has been the one absorbing the differential.
According to data, the landing cost for PMS presently is about N1100, and the State-owned oil company absorbs about N600 for every litre of petrol.
The NNPCL had last month said that it was facing ‘financial strain’ due to its role as a fuel supplier of last resort.
Osifo asserted that tackling the present challenge would involve the government granting a special exchange rate regime to the NNPC Ltd.
This, he said, would enable marketers to purchase petrol from Dangote Refinery at a reduced rate, leading to a decrease in fuel prices.
He added that “if NNPCL is granted a special forex rate of about N1000/S, the cost of petrol importation will crash, and fuel prices will drop to around N600. per litre.”
“If you give a special rate to NNPC, you don’t need to pay for subsidy anymore,” Osifo said, citing the example of Dangote Refinery, which was granted a special rate to sell petrol.