The Federal Government of Nigeria has been urged to address the issues of Gas importation into the Country as Nigeria LNG Limited is only producing 30 percent of domestic consumption in Nigeria leaving Nigerians to import the remaining 70 per cent needed into the Country.
This task was given by the Group Managing Director, Rainoil Limited, Gabriel Ogbechie, at the Association of Energy Correspondents of Nigeria, NAEC, Webinar series held last Thursday while speaking with the theme: Deregulation and Sustainable National Energy Future through Natural Gas.
He wondered why NLNG should be exporting Gas while domestic consumption has not been met.
“Exportation of Gas by NLNG while domestic consumption has not been meet is an issue for the Federal Government to address. NLNG only produces 30 percent for Domestic consumption leaving Nigerians to import the remaining 70 per cent needed for domestic consumption into the Country”, he said.
Speaking further on the current uncertainty over Petrol Price and Challenges, he said, NNPC has remained the sole importer of Premium Motor Spirit, PMS, the Federal Government paid N725bn as petrol subsidy in 2019 and spent over N101.65bn on subsidy in Q1 2020, Covid-19: Subsidy was “discontinued” in March 2020 by the PPPRA following the crash in the global crude oil prices…price modulation. PMS pump price was moved from N145/ltr to N125/ltr as landing cost of PMS was N99.44/litre.
As crude oil prices recovered and PMS landing cost increased, he said, PMS pump price were moved to N143.8/ltr in July 2020, N151.56/ltr in Sept 2020, N162/ltr in October and N165/ltr in November 2020.
He noted that In February 2021, subsidy element “returned” as crude price hit $64/bbl and landing cost of PMS increased to N186.33/ltr (while pump price remained at N165/ltr), adding that CBN has devalued the official exchange rate to ₦401/$1 from ₦380/$1.
In March 2021, crude price averaged $67/bbl thereby increasing landing cost of petrol to N189.61/ltr, and fuel subsidy in March 2021 is estimated at N102.96bn.
Lack of clarity from the Ministry of Petroleum on the pricing regime (current and future) according to him has resulted in inconsistent communications form industry agencies, increased speculation by marketers (buy-sell decision making), inconsistent supply of product, panic buying by the public and hike in transportation fares and product prices.
On prospects for marketers in a fully deregulated downstream sector, he listed the benefits to include: cost savings for the government and increased funds for critical infrastructure / sectors (N10.413tn spent on fuel subsidy between 2006 and 2019), enable marketers to freely source products and leverage supply chain options… a more level playing field, increased competition will improve efficiency and customer-service, allows for better planning / forecasting buy Marketers, a fully liberalized sector will attract further Foreign Direct Investment and margins expected to be tighter…as competition drives down PMS pump price.