Nigeria records about N1.4 trillion yearly as under-recovery from its importation and sale of Premium Motor Spirit at N145 per litre, Petroleum Resources Minister Ibe Kachikwu said yesterday.
Thank you for reading this post, don't forget to subscribe!He spoke at a meeting in Abuja where stakeholders in the Liquefied Petroleum Gas (LPG) sector met to review the challenges of the LPG market.
Kachikwu explained that it was time Nigeria began to look at alternative fuel sources, such as LPG, which are clean and less expensive.
He said President Muhammadu Buhari would in the next two months launch an infrastructure rebirth plan with which the country would leverage to attract private finance to upgrade her oil and gas infrastructure.
Said the minister: “Clean energy is very essential and we need to move away from complete utilisation in our transport sector of only PMS which is creating a lot of under-recovery of N1.4 trillion per annum of exposure to the government.
“At the end of the day, we begin to go into other components of cleaner fuels and rely less on the PMS that is gotten from out of the country.”
Asked to clarify if the figure on petrol under-recovery was annually and how the government felt about it, Kachikwu replied: “Yes, currently. That is being addressed at a very high level and I don’t want to go into that.”
In March, the Nigerian National Petroleum Corporation (NNPC) disclosed that its expenditure on petrol subsidy was N774 million daily, and that 50 million litres was consumed across the country everyday.
NNPC’s Group Managing Director Dr. Maikanti Baru described the amount as “under-recovery”, adding that the huge fund was due to the proliferation of filling stations in communities with international land and coastal borders across the country.
Kachikwu also indicated that the government would launch an infrastructure rebirth plan for the oil and gas industry. The rebirth plan he noted, will enable private investors put in money in key infrastructure assets across the entire value chain of the sector.
“I think government is focused in all the areas. We are hoping to launch an infrastructure rebirth map for the oil sector over the next two months, and I hope His Excellency, the President will launch that.
“The effect is that it will be to open up tariff and create policy positions that will enable people to actually go in and invest in critical infrastructure that is needed because anywhere you go, whether it is distribution of petroleum products massively through trucks and rather than through pipelines, whether it is being able to take crude into refineries or distribute gas throughout the country, infrastructure is so key.
“There are lots of stranded gas and power everywhere. Distribution is key; infrastructure is key. We need to find a way of finding enough incentives to enable the private sector go in very bullishly and put the money where it is supposed to be,” he explained.
On the significance of the LPG meeting, Kachikwu said: “Coming from this meetings we are having, we will come up with recommendations of what DPR needs to do to deepen licensing issues and enforcement issues, but over and above just going after individuals who have done it wrongly; what are the incentives, schemes and structures we need to put in place, and it just goes to tell u where the storage capacities for the gas we have been buying; where are the official distribution and sales centers? If we deepen the regulation, deepen the licensing and enforcement, we should be able to get there.”
He noted: “But, like you know, we already have a gas policy which was approved at FEC and all of this is in there. What this group is going to do is to take a piece of that as it concerns LPG and say how we can take that policy document and expand and activate the whole LPG.”
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