Mohammed, who stated this at the inauguration of the Advertisers Association of Nigeria (ADVAN) marketers conference in Lagos on Friday, said only the liberalisation of petrol supply will ensure the availability of the products.
“Distinguished ladies and gentlemen, I can tell you that that decision is inevitable, if we are to end the crippling fuel scarcity that has enveloped the country, ensure the availability of the products and end the suffering that our people have been subjected to.
“With the drastic fall in the price of crude oil, which is the nation’s main foreign exchange earner, there has also been a drastic reduction in the amount of foreign exchange available. The unavailability of forex and the inability to open letters of credit have forced marketers to stop product importation and imposed over 90% supply on the NNPC since October 2015, in contrast to the past where NNPC supplies 48% of the national requirement,” the Minister said.
He explained that in the absence of available forex lines or crude volumes to continue massive importation of petrol, it is clear that unless immediate action is taken to liberalise the petroleum supply and distribution, the queues will persist, diversion will worsen and the current prices will spiral out of control.
He stressed that the liberalisation of petrol supply and distribution will allow marketers and any Nigerian entity willing to supply petrol to source for forex and import the product to ensure availability in all locations of the country.
According to him, the resultant fuel scarcity has created an abnormal increase in price, resulting in Nigerians paying between N150 and N300 per litre as prevalent hoarding, smuggling and diversion of the product have reduced volumes made available to citizens.
He further explained that the new fuel price regime should not be misconstrued as the removal of subsidy since there is no provision for subsidy in the 2016 Appropriation.
He added that the previous price of the product gives an estimate subsidy claim of N13.7 per litre which translates to N16.4 billion monthly.
“There is neither funding nor appropriation to cover this,” he explained.
On the benefits of the new price regime, he said it would end the recurrent fuel scarcity by ensuring product availability across the country, reduce hoarding, smuggling and diversion of products substantially, improve fuel supply situation through private sector participation, create labour market stability, as this will potentially create additional 200,000 jobs through new investments in refineries and retails and prevent potential loss of 400,000 jobs in existing investments.
Alhaji Mohammed gave the assurance that underthe new price regime, the Petroleum Products Pricing Regulatory Agency (PPPRA) and the Department of Petroleum Resources (DPR) will be further empowered to ensure a level playing field and strict compliance with market rules by all stakeholders.