The Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Dr Emmanuel Ibe Kachikwu has reiterated the urgent need for deregulation of the downstream petroleum sector and ending the controversial fuel subsidy programme in the country.
Kachikwu, while presenting a keynote address titled “Energy Crisis and Sustainable Development in Nigeria: The Way Forward”, at the National Association of Energy Correspondents (NAEC) Conference held at the Eko Hotel & Suites, Victoria Island, Lagos, on Thursday said petroleum subsidy is no longer sustainable. “Subsidy creates distortion in government revenue distribution as a result of round-tripping and unnecessary carryover of expenditures every year in a way that is difficult for government to control or sustain,” he said.
The NNPC boss, who was represented by Mrs Bolanle Ashafa, acting managing director of Nigeria Engineering and Technical Company (NETCO), said deregulation would encourage domestic private sector participation and inflow of foreign investments. He stressed that deregulation will also provide a fair deal for Nigerians from the abundant petroleum resources, through fair product prices for consumers, full cost recovery, and reasonable margins for operators.
He said: “Subsidy accounted for 20 per cent of the federal government budget in 2013. Implementation of the policy (deregulation) will entrench efficiency in product usage, product availability and effective competition among investors, hence ending products shortage. Critical enablers such as security of supply and distribution infrastructure must be assured to guarantee the availability of the petroleum products at affordable prices.”
Kachikwu also said that the corporation was fully committed to reviving the existing four national refineries to operate at full capacity in a bid to boost domestic petroleum products supply.
“Removal of price control mechanisms is deemed imperative to ensure full growth of the sub-sector, by allowing private stakeholders to complement the effort of government in developing the industry,” he adds.
By Olisemeka Obeche