NNPC pushes for fuel subsidy removal: says it’s not sustainable

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The Nigerian National Petroleum Corporation on
Thursday,
strongly advocated the complete halt in the
payment of
subsidy on petrol.
Although the corporation admitted that it was
aware of the
massive nationwide protests and industrial
actions that took
place in January 2012 when the Federal
Government
announced the complete withdrawal of subsidy
on petrol, it
however maintained that the continued payment
of subsidy
was not sustainable.
Subsidy is the difference between the Expected
Open Market
Price of fuel and the actual or retail price that is
paid by
consumers for the product at petrol stations as
regulated by
the Department of Petroleum Resources.
The Group Coordinator, Corporate Strategy and
Planning,
NNPC, Mr. Timothy Okon, explained that since
government
does not control the prices of crude oil, its
fluctuation often
creates fiscal instability in the country, a situation
that
impacts negatively on Nigeria’s revenue.
Okon spoke at the 2015 Oloibiri Lecture Series
and Energy
Forum organised by the Society of Petroleum
Engineers in
Abuja.
He noted that when crude oil prices came down
to about $40
per barrel, subsidy was not paid during that
period as the
landing cost of the product was either equal of
even lower
than its market value.
Okon explained that subsidy on petrol creates
uneven
distribution of revenue, round tripping and
unnecessary carry-
over of funds from one year to another in a
manner that was
difficult to control by the Federal Government.
“So, from the technical analysis made, it is
obvious that
subsidy is real. And from our analysis, we look at
it as
something that should go because it is not
sustainable,” he
said.

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