The House of Representatives’ Committee on Downstream has summoned the Nigerian National Petroleum Company Limited (NNPC), and other stakeholders in the oil and gas sector to an investigative hearing over the scarcity and rising prices of petrol, diesel, and cooking gas in the country.
Those also summoned include – Mele Kyari, the Group Managing Director (GMD) of NNPC, the Chief Executive Officer (CEO), Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, among others.
In his presentation, Ahmed suggested three measures to tackle the challenges in the supply and distribution chain of oil products in Nigeria, amongst which is “the required amount of forex for importation of the petroleum products (should) be made available to the genuine importers at Central Bank of Nigeria (CBN) official rate.”
Ahmed also said the government should “encourage the establishment of more local refineries and LPG processing facilities to meet domestic demands,” adding that an increase in the LPG supply from major domestic producers, including NLNG, BRT processing, CNL, LPG, FSO,” would resolve some of the issues.
The NMDPRA stated that in addition to the three suggested solutions, “an extensive consultation is required amongst key stakeholders towards lessening the present tension being generated by the global high oil prices.”
Ahmed said, “Presently, Nigeria is a net importer of refined petroleum products, including AGO, as the country imports about 100% of AGO consumed locally. An average of 12 million litres is also being consumed daily based on the average truck-out quantity.
“The upswing in international price, combined with the prevailing naira/US dollar exchange rate contributes about 80% of the product price at the pump. While the official naira/US dollar exchange rate has remained relatively stable at about N415/US dollar since the beginning of the (Russia-Ukraine) war to date, the parallel rate on the other hand has increased considerably.
“The challenge with this is that petroleum products importers are unable to access the required amount of Forex at the official rate and therefore rely on the parallel market to complement their forex US dollar requirements.
“In addition, the monitored price of AGO currently ranges between N710 per litre and N750 per litre in the coastal areas, while the LPG price is about N800 per kg.”