Group Managing Director and Chief Executive Officer of the Nigerian National Petroleum Corporation Limited, Mele Kyari has said that plans by President Bola Tinubu are underway to dole out palliatives to Nigerians to cushion the effect of the sudden removal of fuel subsidy. Kyari said this in Abuja shortly after a meeting with the Senator Abdullahi Adamu-led National Working Committee NWC of All Progressives Congress APC at the ‘Buhari House’ national secretariat of the party. According to him, one of the countries four moribund refineries would come back on stream this year while another one would be revitalised next year until all of them are put in order.
He said “there is a gradual process now of making a flexible and single foreign exchange regime. Everyone will be able to have access to foreign exchange and there is a transition going on now and NNPC cannot continue to be the sole importer. We know that this is going to vanish and the market will stabilise. There is an ongoing process of rehabilitation and one of the refineries will come on stream this year. The second will come on stream next year and the third will come the 2025. Of course it is very obvious that we can no longer afford it. Subsidy bills have piled up. The country is not able to settle NNPC for the money we are spending on the subsidy. Therefore pricing petroleum at the market is the right ring to do at this time. We believed that this will benefit the overall country in the long run and in a long term.
“I am aware that Mr President has directed some engagement and some palliative will be put in place. And I am very sure this will happen”. At the meeting with the APC NWC, Kyari said while there was subsidy in 2022, not a single Naira was provided for the purpose of financing the subsidy in 2023. Ultimately, while we held back our fiscal obligations, we still have a net balance of over N2.8 trillion that the federation should have given back to the NNPC. For any company, when you have a negative of N2.8 trillion, there is no company in the whole of Africa that will lend to you. You cannot have receivables. The provision of subsidy is there but absolutely there is no funding for it. It means it is only on paper. So, it doesn’t exist. The conversation today is not really about when you are taking off subsidy. We no longer can bear it because if we continue, we will run into defaults and the defaults of NNPC is the default of Nigeria. Once NNPC goes into defaults and liquidity, it affects every borrowing done by the country, even the sub-nationals. Your lenders will come back to you and say your country can no longer pay.
“The only way you can stop this, is to stop this conversation around subsidy. When Mr President announced that subsidy is gone, in 24 hours the bond market appreciated. It is nothing else other than the statement around subsidy and balancing of the apex market. These two elements are major concerns that every investor all over the world, every partner that we have is worried about. What is your apex bank foreign exchange regime and how do you deal with your subsidy? They know that this subsidy constitutes a huge amount of money and this country may not be able to survive and pay its debts. It is very clear that everybody understands this”, Kyari said.
