The Nigerian National Petroleum Corporation (NNPC) said it had imported three billion litres of fuel to avert the scarcity of the product during the Christmas festivities, and well into 2019, indicating that it may have incurred a total of about N75 billion as 'under-recovery' cost.
The Corporation now uses the terminology, 'under-recovery' to describe the cost of subsidising petrol imports, to retain the pump price at N145 per litre.
The state oil company disclosed yesterday that under-recovery cost has dropped from about N80 per litre which it was when crude oil price was high to N25 per litre currently.
Going by this revelation, the imported three billion litres of petrol may have culminated in an under-recovery cost of N75 billion.
Further calculated on the basis of 60 days which the NNPC said the three billion litres would last Nigeria, amounting to 50 million litres consumption per day, the corporation may be recording an under-recovery of N1.250 billion daily to keep petrol pump price at government regulated price of N145 per litre.
NNPC’s Group Managing Director, Dr. Maikanti Baru, told journalists in Abuja on Monday that under-recovery cost had declined alongside the prices of crude oil at the international market.
Baru spoke after inspecting petrol stations within the Federal Capital Territory (FCT), Abuja to guarantee the corporation’s efforts at checking scarcity of petrol during the Yuletide.
Baru, who stated that the NNPC had stockpiled its petrol reservoir to take Nigeria for about 60 days, explained that when oil prices were around $80 per barrel, the NNPC incurred as much as N80 under-recovery on every litre of petrol it brought into Nigeria.
He claimed that while the corporation made efforts to ensure Nigerians celebrated the Christmas and New Year without petrol scarcity, some people he didn’t disclose their identities attempted to disrupt the plans but the corporation was fast to checkmate them.
“We started out at Nyanya and then here. Unlike 24 of December last year, there was scarcity, today we started with our eyes clear, and no eye-bags.
“Today we are having much lower crude oil price and under-recovery has also gone down significantly,” Baru said, while indicating it was around N25 per litre.
According to him: “We don’t have much controls over under-recoveries, although, it feels good as producers of crude oil, that if prices of crude oil goes up, then we have more revenue come in in terms of crude oil sales, however, when you are importing, the product prices actually follow the crude prices almost immediately.
“When we had very high crude prices – over $80 per barrel, we were seeing under-recovery getting to N70 to N80 per litre, and as it dropped - it came to about $60 per barrel, the pricing has also gone down and under-recoveries. The only measure we can put in place is to ensure we are sufficiently prepared to keep bringing products.”
Asked what the NNPC did differently to ensure there was not a repeat of the December 2017 situation, Baru, said it stockpiled petrol and ensured no marketer could hoard or divert products as it allegedly was in 2017.
“There was a lot of work. This time last year, we were in a very bad situation in terms of supply, and we also experienced a lot of sharp practices – the oil marketing companies were very busy diverting products, hoarding products. Of course, we were aware of some of their collaborators that aided and abetted them to divert products.
“It got to a point that as much supply as we put in, they were taking and locking them up, but with the support and approval of Mr. President, we were able to bring in a lot more product than was required to make sure that despite their hoarding activities and diversion, there was much more product available on ground than their activities, to the point that we built up stock and in late January and early February we were bringing double of the daily requirement into the country,” he stated.
He added: “At the moment, we have 60-day supply in-tank, about three billion litres of PMS that will last us without bringing any drop of fuel in 60 days. We are seeing clear into the election period, so if they are planning for similar situation beyond the Yuletide into the election period, we are going to disappoint them.
"There will be sufficient product, and if any has hoarded, they should better bring it out into the market.”
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