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Nairaland Forum / Nairaland / General / Politics / Presidency Break Silence,explains Hike In Fuel Price (482 Views)
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Presidency Break Silence,explains Hike In Fuel Price by sabacity(m): 8:48pm On May 13, 2016 |
Fellow Citizens:
I have read the various observations about the fuel pricing
regime and the attendant issues generated.
All certainly have strong points.
The most important issue of course is how to shield the
poor from the worst effects of the policy.
I will hopefully address that in another note.
Permit me an explanation of the policy. First, the real issue
is not a removal of subsidy. At $40 a barrel there isn’t much
of a subsidy to remove.
In any event, the President is probably one of the most
convinced pro-subsidy advocates.
What happened is as follows:
our local consumption of fuel is almost entirely imported.
The NNPC exchanges crude from its joint venture share to
provide about 50% of local fuel consumption. The remaining
50% is imported by major and independent marketers.
These marketers up until three months ago sourced their
foreign exchange from the Central Bank of Nigeria at the
official rate. However, since late last year, independent
marketers have brought in little or no fuel because they have
been unable to get foreign exchange from the CBN. The CBN
simply did not have enough. (In April, oil earnings dipped to
$550 million. The amount required for fuel importation alone
is about $225million!) .
Meanwhile, NNPC tried to cover the 50% shortfall by
dedicating more export crude for domestic consumption.
Besides the short term depletion of the Federation Account,
which is where the FG and States are paid from, and further
cash-call debts pilling up, NNPC also lacked the capacity to
distribute 100% of local consumption around the country.
Previously, they were responsible for only about 50%.
(Partly the reason for the lingering scarcity).
We realised that we were left with only one option. This was
to allow independent marketers and any Nigerian entity to
source their own foreign exchange and import fuel. We
expect that foreign exchange will be sourced at an average
of about N285 to the dollar, (current interbank rate). They
would then be restricted to selling at a price between N135
and N145 per litre.
We expect that with competition, more private refineries, and
NNPC refineries working at full capacity, prices will drop
considerably. Our target is that by Q4 2018 we should be
producing 70% of our fuel needs locally. At the moment
even if all the refineries are working optimally they will
produce just about 40% of our domestic fuel needs.
You will notice that I have not mentioned other details of the
PPRA cost template. I wanted to focus on the cost
component largely responsible for the substantial rise,
namely foreign exchange. This is therefore not a subsidy
removal issue but a foreign exchange problem, in the face
of dwindling earnings.
Thank you all.
VICE PRESIDENT YEMI OSINBAJO, SAN |
Re: Presidency Break Silence,explains Hike In Fuel Price by sabacity(m): 8:49pm On May 13, 2016 |
Hmmmm...
Nigerians over to you.... |
Re: Presidency Break Silence,explains Hike In Fuel Price by ademikefaith(m): 8:50pm On May 13, 2016 |
All rice |
Re: Presidency Break Silence,explains Hike In Fuel Price by marshalcarter: 8:53pm On May 13, 2016 |
Who understand should pls break down Ma brain still formatting from fuel |
Re: Presidency Break Silence,explains Hike In Fuel Price by Mynd44: 8:55pm On May 13, 2016 |
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