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Rising Oil Price Has “Knock On” Effect On Nigeria’s Downstream – Minister

While there’s excitement over the rising prices of crude at the international market, for Nigeria, it is a bitter sweet situation over the country’s lack of refining capacity. According to the Minister of Finance, Mrs Kemi Adeosun, the rising prices has “knock on effect” on the countries downstream as it impacts on the landing cost of petrol and ultimately on the government controlled pump price of petrol. Private marketers have ceased importing petrol since October last year due to the rinsing prices, as it is no longer profitable to import at sell at government regulated retail price, a development that has resulted to recurring petrol scarcity across the country.
Adeosun said, “For every time we get excited that the oil price is going up, there is also a knock on effect on the price of imported petrol and that is a function of us not having refining capacity, it is one of the unfortunate impact of that.”
On the controversial subsidy issue, she explained that government only allowed the Nigeria National Petroleum Corporation (NNPC) to embark on under-recovery of resources, rather than outright payment of subsidy to marketers, as operated in the past.
Speaking Wednesday in Abuja, Adeosun noted that the NNPC was presently the sole importer of petrol ’’and hence there is no subsidy but rather under recovery.” Technically today, there is no subsidy but there is under recovery,” she said.
“They are importing at a higher price than they are selling which means they are losing money, which means effectively that loss is being borne by everybody and effectively it reflected in the federation account, she explained.
The FAAC account is shared every month among the three tiers of government. The account is made up of Customs revenue, FIRS revenue and NNPC revenue.

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