Cheap petrol is coming, Minister of State for Petroleum Resources Dr. Ibe Kachikwu predicted yesterday.
His forecast is based on what he described as the competition inherent in the Premium Motor Spirit (PMS) price modulation.
He said the price of diesel, which is now 40 per cent down amid surplus supply, was enough evidence that petrol prices will also crash. Petrol is N145 per litre.
Presenting his scorecard on his two years in office in a podcast released to reporters in Abuja, Kachikwu said that “once Nigerians throw their trading skill in it, once competition thrives, the prices will continue to tumble.
“ My guess is that you will see the prices tumble in the next four, five to six months. The market will be more stable and definitely the prices will be lower than what we see today.”
Besides, said the minister, in the last 10 years, this is the first time that the three refineries are working simultaneously, although at 50 per cent of their capacity.
“We expect to put in investment to put them to 90 per cent capacity,” he said.
According to Kachikwu, this is the first time the NNPC group has recorded savings, which could be used to address the refineries alongside the Joint Venture Partners.
The minister noted that this is the first time the government has upgraded the depots. Of the 19, only three are grounded.
He said this is the first time that a government is considering the replacement of the 35-year-old pipelines.
“It has been one massive problem after the other for the sector to stabilise in term of product supply.
To Kachikwu, “the time has come to take on the problem bullishly and that is what we are trying to do”. “So, we believe the ire will be money for infrastructural development in the downstream sector”, he said, adding:
“We believe that a lot of the companies will jump up now and be able to sell at the right prices and not the pump down by the problem of price control and will be able to grow their businesses. We believe that most of them, efficient ones will drive prices southward rather than northward.
“And we believe that almost 200,000 jobs will be created in this sector and over 400,000 jobs will be saved, which would have been lost if we had continued on the path we were in.”
On assumption of office two years ago, Kachikwu said, he inherited a debt of N600billion owed to marketers of Premium Motor Spirit (PMS), which the Federal Government settled.
His words: “Now, why do we have to do this ? The first one is that when we came into position in August, last two years, about N600billion was owed to marketers. And all of them basically ceased importing products .
He spoke of how he lifted Nigerians from the pains of scarcity of the Premium Motor Spirit and its concomitants queues.
He noted that the product was scarce because its selling price was higher than its cost price, hence the removal of the Petrol Support Fund (PSF), also known as petrol subsidy.
Kachikwu said: “ I know that a lot of you watched as we moved price from N86.50; you to N145 were screaming where were we heading ?”
According to him, there would have been no better time to accomplish the feat other than in the administration of President Muhammadu Buhari, who is trusted enough to utilise the benefits from PMS for the betterment of the country.
This, according to him, upon the removal of the subsidy, the marketers were reluctant to import the product owing to their lack of access to forex.
He said the government had no money from crude oil following the reduction in production as the militants were on rampage .
The minister said: “The reality was that we did have the barrel to throw at it; we didn’t have the refineries . The Federal Government was bleeding. The production today is about 1.4 because the militants attack had taken away about 800,000 barrels per day. Once you do not have the barrel, foreign exchange does not come in.
“So foreign exchange was depleting and the question was what did we do with the foreign exchange we had.
“And the President made the right choice to leave what we have intact so that we do not run into a state of bankruptcy. The only option we had was to create a liberalised environment so that people can bring in their products, source their money from secondary markets, charge the right price, which they would not do unless the price was high. Fellow Nigerians, we were left with no option than what we did.”
According to Kachikwu, the refineries were not working but as soon as the government was able to revamp, the 445 barrels per day was sent to the refineries
He noted that the situation culminated in almost making the Nigerian National Petroleum Corporation (NNPC) the sole importer of PMS instead of its statutory provision of 55 per cent.