The Group Chief Executive Officer (GCEO) of the Nigerian National Petroleum Company Limited (NNPCL), Malam Mele Kyari, says Nigeria does not have the money to fund petrol subsidy.
According to Kyari, the federal government has not been able to fund petrol subsidies for 2022 and 2023 despite budgetary provisions.
Persecondnews recalls that President Bola Ahmed Tinubu had during his inaugural speech on May 29 at the Eagles Square, Abuja, announced the removal of subsidy payment on petrol.
Tinubu said the immediate past administration of Muhammadu Buhari did not make provisions for subsidy in the 2023 budget beyond June.
Speaking on Thursday in an interview on Arise TV’s Morning Show monitored by Persecondnews, Kyari noted that
apart from the inability of the NNPC to finance subsidies, the federal government was yet to provide the budgeted funds for the years 2022 and 2023.
He said: “The key issue is the country does not have the money to back subsidy. The burden of subsidy must be financed because the provision in the law simply means that the government will write a cheque to NNPC at the end of the month for the service that we’re providing to the nation.
“You can make a provision in the budget, but you must finance it, and that financing part is absent. In 2022 when that provision was made in the budget, not a single naira was paid to the NNPC to provide those subsidies.
The implication is that you have to take the cash flow of the NNPC to continue to sustain the regime, this has become a daunting task for the NNPCnalmost impossible for NNPC Ltd to bear the cost.
“Absolutely, there is a provision in the budget but you do not have the cash to back it up or you also don’t have the fiscal obligation that should have come for the NNPC to settle for this.
“And this definitely means that there is provision for the end of June, according to the appropriation act but you can’t give what you don’t have.”
The NNPCL boss noted that the recent increase in fuel pump prices will heighten market competition, adding that the alignment of prices with market rates will attract more oil marketing companies to invest in Nigeria’s oil industry.
“Oil marketing companies have stayed away from the Nigerian market due to the fuel subsidy regime.
“The beauty is that there will be new entrants into the market, their reluctance to come into the market all along was because of the subsidy regime.
“That regime does not guarantee repayments back to those who provid the product at subsidized prices. Now that the market regulates itself, oil marketing companies can actually import products or produce locally.
” They can take the product into the market, sell it and get their money back.
“The prices Nigerians are seeing today are reflective of the current market price of the commodity. What this means is that prices in the market can go down at any time and the market will adjust itself,” Kyari explained.
“But now that prices will reflect the market realities, more companies will be willing to invest in Nigeria’s oil market.”
Kyari assured that Nigerians will continue to see price adjustments, adding that NNPCL cannot do more than 30% of the market going forward.