The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mr Mele Kyari, says it is only the elites and not ordinary men that benefitted from fuel subsidy in the country.
Mr Kyari added that the era of fuel subsidy or under-recovery was gone in Nigeria.
In an interview on state-owned TV, National Television Authority (NTA), he explained why it was not in the best interests of millions of Nigerians to carry on with fuel subsidy.
“By stopping this under recovery, we are also stopping the subsidising of the elites. In any case, subsidy is an elitist thing because it is the elites that benefit. They are the ones that have SUVs, three, four cars in their houses,” he said.
Noting that, “The ordinary man hardly benefits from this under recovery, subsidy or whatever name you may wish to call it. We sincerely believe this is the perfect time to ensure that these benefits actually come to the ordinary man and not to the elites.”
Chronicle NG reports that in 2020 Appropriation Bill, fuel subsidy is expected to gulp at least N450 billion.
Speaking further, Mr Kyari said, “As you are aware, fuel under recovery means taking back some money that will have gone into funding infrastructural projects such as education, health and many others.
“By stopping under recovery, we’re ensuring that these resources are available for government projects,” he added.
Mr Kyari then explained the role coronavirus played in NNPC’s decision. “Before COVID-19, fuel was selling for N145 per litre.
“With COVID-19, crude oil price collapsed to all-time low of below $20/barrel which has some impact on price of petroleum products. Selling fuel at N145 means at some time, NNPC was doing some form of under recovery.
“By under recovery, it means NNPC will buy petroleum products, come into this country, sell @ below market price & take the heat on the cost differential.
“What we’ve done today is to introduce a system where that under recovery ‘ll banish so that market forces come into play, such that at the end of the day, Nigerians will benefit from the enormous resources that abound in the petroleum supply and distribution mechanism.
“The oil industry has its way of responding to situations of low oil prices such as the one we are in now. First of all, you cut your cost and then two, you extend your payment processes in such a way that you don’t pay what you can pay tomorrow today. That way, you have more resources in your hand to respond to situations.
“That’s exactly what we have done with our partners: to cut down on our budget so that the money we have made from current realities of the oil price will be utilised to meet our basic operational needs.”
Explaining how NNPC will play in the oil and gas sector, he said, “What is very different in terms of our support is that we are not contributing cash. We are making sure individual companies in the oil and gas Industry deliver on material things on the basis of their respective procurement processes.”
“The oil and gas Industry will deliver its support based on three areas: firstly, to provide hospital consumables. Secondly, to provide support services when patients are at the hospital (beds, ventilators, etc and thirdly to provide lasting infrastructural support that’ll outlive COVID-19.”
