Financial Energy Review
……..NNPC spends N123.7bn as petrol subsidy in September……
The Chief Executive Officer of NNPC Limited, Mallam Mele Kyari has explained that the Federal Government’s decision to retain subsidy on petrol pump price was social and economic, and had nothing to do with politics.
Kyari who disclosed this during an interview aired by Channels Television said the subsidy policy has nothing to do with the corporation, noting that in the new NNPC Limited, the company would bill the government for handling the transaction.
According to him, the NNPC will buy the product and sell it to the government which will in turn supply it to Nigerians.
“I don’t see any political consideration for this. The deregulation is clearly spelt out in the Petroleum Industry Act and within a time frame.
“Deregulation is about pricing petroleum at the appropriate price and this is what it is now.
There are always social circumstances that make the government and states decide whether they are going to provide subsidies on certain commodities. You can subsidize production or consumption for very different reasons.
“The decision the state has made is that it is not the right moment or timing because of economic consideration to take out that subsidy because we would be transferring a number of significant costs to consumers and ultimately it is going to impact on inflation and many other social considerations that would come.
“This we understand perfectly and from the benefit of hindsight we have seen major democracies, first world countries implementing what is clearly a subsidy.
For instance, when you take out tax from petroleum you are simply putting back a subsidy on it”.
Kyari blamed ongoing supply disruptions on increasing cost of operation in the downstream sector, assuring that the government was working with stakeholders to resolve the challenges.
“Despite the N10 that has been added to the freight rate, the suppliers are still not able to meet their total cost”, he added.
