Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr Mele Kyari, on Wednesday said the decision to finally end the fuel subsidy regime is in the interest of ordinary Nigerians.
Kyari had on Monday said,“There is no subsidy and it is zero forever,” adding, “going forward there would be no resort to either subsidy or under recovery of any nature.”
“NNPC will play in the marketplace, it will just be another marketer in the space. But we will be there for the country to sustain security of supply at market price.”
Speaking again on Wednesday, according to a statement from the Corporation, Kyari restated that subsidy removal would free up funds for the various tiers of government to develop basic infrastructure in the education, health, transport, and other sectors for Nigerians benefit.
“Subsidy is elitist because it is the elites that benefit from it. They are the ones that have SUVs, four, five cars in their garages. The masses should be the ones to benefit,” Kyari said according to a statement by the Corporations spokesman, Dr. Kennie Obateru.
He explained that there are many things wrong with the under-recovery mechanism saying it makes government supply more fuel than is needed for national consumption.
“This makes the under-recovery to be bloated because we unwittingly subsidize fuel for the whole of West Africa. That has to stop,” the NNPC boss stated.
He explained that the removal of subsidy would automatically correct the distortions it created in the market such as products arbitrage and smuggling, stressing that it would also provide the needed impetus for the NNPC to establish retail outlets in neighbouring countries.
Kyari also disclosed that the NNPC will no longer be involved in the management of the nation’s refineries after their rehabilitation, saying the refineries would instead be contracted to private company to manage them on an Operations and Maintenance (O&M) basis.
“We are going to get an O&M contract, NNPC won’t run it. We are going to get a firm that will guarantee that this plant would run for some time. We want to try a different model of getting this refinery to run. And we are going to apply this process for the running of the other two refineries”, he stated.
He explained that the plan, ultimately, is to get private partners to invest in the refineries and get them to run on the NLNG model where the shareholders would be free to decide the fate of the refineries going forward.
Kyari stated that this model, which is totally different from previous approach, would guarantee the desired outcome for the refineries.
On calls for a reduction in the price of kerosene, he said the corporation’s focus was rather on how to migrate all those who were still using kerosene for domestic cooking to the use of Liquefied Petroleum Gas (LPG) which is popularly referred to as cooking gas.
According to him, apart from LPG being a cheaper fuel than kerosene, it is also safer and more environment-friendly.
He said the Minister of State for Petroleum Resources, Chief Timipre Sylva, was championing policies to deepen the adoption of LPG for domestic consumption, adding that widespread adoption of LPG usage was the best solution to kerosene supply challenges in the long term.