Drama Over, Kachikwu Addresses Reps on Fuel Price, Deregulation and Refineries
Nigeria’s minister of state for petroleum resources, Dr Ibe Kachikwu, on Monday, appeared before the federal house of representatives in Abuja, to answer questions on the recent rise in fuel price to N145.
There had been some drama earlier in the day when members of the house elected on the platform of the Peoples Democratic Party (PDP) prevented the minister from gaining access to the green chambers of the national assembly to address the lawmakers.
While fielding questions from the legislators, Kachikwu stated that the price increase was as a result of liberalising the downstream sector to allow oil marketers import refined petroleum. He added that ongoing challenges with foreign exchange meant the importers had to get United States dollars from secondary sources at about N285 which was then factored into the cost of fuel per litre hence the new price belt.
When asked if government had by so doing, deregulated the oil downstream sector, Kachikwu said it was a debate about nomenclatures and he would personally stick to the use of the word ‘liberalisation.’ He noted that deregulation has many components but in anycase, it was the expected result of ongoing reforms in the sector.
Kachikwu debunked reports that some labour unions claimed the government had agreed to N120 price cap for pump price of fuel, explaining that labour unions had not only agreed to the N145 price cap but had also suggested that the Nigerian National Petroleum Corporation (NNPC) not sell far below the price to avoid fraudulent diversion of products by marketers who may not be able to compete with NNPC’s pricing and reach.
While addressing the issue of timing which was asked in relation to countless challenges faced by many poor Nigerians, the petroleum minister stated that the decision to liberalise became inevitable in the face of challenges faced by the government in addressing fuel scarcity and avoiding a total breakdown of governance.
“We have no options. If we want to continue to pay salaries and to continue development, we have to liberalise. The time has been thrust upon us by fate,” Kachikwu said.
The minister also agreed with majority leader of the house, Hon Femi Gbajabiamila who stated that his research showed other nations facing similar challenges as Nigeria had taken similar steps, describing it as “the urgency of now.” Kachikwu however added that the best time to have taken the decision was “yesterday” but better late than never.
Kachikwu however refused to agree with minority leader, Leo Ogor’s suggestion of the need to tender an apology to former President Goodluck Jonathan who once proposed the total removal of fuel subsidy in 2012 which was rejected. The minister stated that he was not a politician and he could also not say whether Jonathan could see into the future as stated by Ogor, since he (Jonathan) was not a pastor.
On the question of refinery licenses issued but not being used, Kachikwu said there were 65 of such granted by the ministry before he assumed office which were now being reviewed. He noted that there was a possibility of over-building refineries since crude oil production has an annual fixed quantity.
Kachikwu maintained that the federal government is working on fixing existing refineries and building new ones, with an 18-month mandate for the repairs, building and reforms. He added that by 2019, Nigeria should be able to refine 90% of its local fuel consumption.
The minister stated that multi-faceted efforts including local participation, investment in modular refineries and security upgrade among others were being made to stem the tide of militancy in the Niger Delta.
“Our budget is based on 2.2 million barrels per day oil production and it is important we get back to that point as soon as we can,” he said.
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