NNPCL Back To Being Sole Importer of Petrol Due To FX Issues – Mele Kyari

Mele Kyari has stated that the NNPCL is back to being the sole importer of Petrol due to FX issues in Nigeria.

 

NewsOnline Nigeria reports that a few months after Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited said the company would no longer be the sole importer of petrol into the country, he has said foreign exchange issues have not allowed private companies to import petroleum products.

 

This Nigeria news platform understands that Mele Kyari said this during the ongoing Energy Labour Summit organized by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) in Abuja.

 

ALSO: Tinubu Government Speaks On Return of Fuel Subsidy

 

According to Kyari, the NNPCL has once again become the sole importer of petrol since private companies cannot access foreign currency due to shortage issues.  

He said: 

• “We are the only company importing petrol into the country. None of them can do it today. For them, access to foreign exchange is difficult. We create foreign exchange (FX), therefore we have access to FX, while their access to FX is limited.”

Backstory

In June 2023, Kyari announced that private companies would have the opportunity to import fuel starting from June 2023, as the NNPCL plans to end crude oil swap contracts and switch to cash payments for fuel imports.

At the time, Kyari said the decision was in line with President Bola Tinubu’s efforts to deregulate the fuel market and alleviate the financial burden on the government. 

During the announcement, Kyari said that the market regulates itself after the petrol subsidy removal, so, oil marketing companies can actually import products or produce locally.

They can take the product onto the market, sell it and get their money back. 

Shortly after the announcement by Kyari, the Nigerian Midstream and Downstream Petroleum Authority (NMDPRA) said that it had granted petrol import licenses to six private companies. During a June 19 press briefing at the State House, the Managing Director of the NMDPRA, Engr.

Farouk Ahmed said the development signified a notable increase in the pool of private companies participating in the importation of fuel, potentially promoting competition and enhancing the efficiency and availability of fuel supplies within the country.   

Engr. Ahmed also said that the licensees had been able to access the FX needed to enable petrol imports.  

What happens now?

There will be pressure on the Federal Government to resolve the prevailing foreign exchange issues which are causing challenges in the petrol, diesel, liquefied petroleum gas (LPG) value chain in the country.  

Beyond that, petrol prices are currently N613 to N620 per litre across the country, if the NNPCL retains the sole importer of petrol, will this amount to a reduction or an increase in prices?  

Oil and gas analyst, Kayode Oluwadare tells Nairametrics that the revelation by Kyari is unofficial confirmation that petrol subsidy is back in Nigeria.

According to Oluwadare, one of the things deregulation (petrol subsidy removal) was supposed to do was to allow independent marketers to import petrol on their own terms.  

However, now that the NNPCL has restored the status quo as the sole importer, it shows that the country is back to the petrol subsidy regime.

Oluwadare says that this move was necessary because of the constant pressure the government has been under since the official removal of petrol subsidies.  

He said: 

• “The government is gradually bringing back the conditions of the fuel subsidy regime. We are now back to the status quo. In the coming days, the petrol pump price will remain the same. We may also see the petrol pump price slightly coming down, with the current global trend, we are not likely to see an increase in petrol pump prices.”