Petrol may sell for N1000p/l on subsidy removal – DPR
By Akpobor Jirue
The Department of Petroleum GB Resources (DPR) , has expressed worries over the clamour for the removal of subsidy on premium motor spirit warning that the price of the product may rise up to as much as N1000 per litre when petrol subsidy is removed.
Director of DPR, Mr. Sarki Auwalu, stated this while delivering a paper at the Second Quarter, 2021 Business Dinner of Petroleum Club Lagos at the weekend.
Responding to a question from participant who expressed worries over the disparity in the petrol consumption figures given by NNPC and the DPR, Auwalu, acknowledged that Nigeria was spending so much on petrol subsidy.
He stressed the need for the provision of alternative fuel in order to avoid plunging Nigerians into paying higher petrol prices when subsidy is removed.
According to him Nigerians may be paying as high as N1, 000 to buy one litre of petrol in the country when subsidy on petrol is removed and when the alternative energy or autogas gas policy becomes fully operational.
He, however, said the alternative fuel regime comes with initial cost as it will lead to spending $400 to convert one vehicles from running on petrol or diesel to running on either Liquefied Natural Gas (LNG) or Compressed Natural Gas (CNG).
Auwalu maintained that converting eight million public vehicles currently present in Nigeria to gas-powered will cumulatively cost $3.2 billion to achieve.
He said: “So, to eliminate subsidy, they don’t call it subsidy anymore now, it’s under-recovery of purchase. So, to eliminate under-recovery, what you need is alternative fuel. Without alternative, you will subject people to higher prices and that is why we go for price freedom.
“As at today, there are 22 million cars in Nigeria. Eight million are for public use. Imagine if you want to convert every car into gas, the average cost of conversion is $400. Converting eight million cars requires $3.2 billion. To do that, there are a lot of environmental investors which can invest and recover from the sale of gas and we are encouraging that.
“Once that is achieved, you will see that PMS can be sold at N1000. After all, the average distance covered by one gallon equivalent when you compare it with LNG or CNG with respect to energy for mobility, is 2.7 against one. One for PMS, 2.7 for LNG or CNG.
” So, with that advantage, you will see that it creates opportunity for this industry again. The issue of subsidy, volume will all vanish and that is what we are working towards.”
He, however, warned that the rise in Nigeria’s local refining capacity as seen in the coming on stream of a number of refineries in the country without a corresponding increase in the country’s oil production volume may threaten the country’s membership of the Organisation of Petroleum Exporting Countries (OPEC).
The director lamented that out of Nigeria’s over 7100 reservoirs and its mature basins, the country was recovering just as low as about 1000, a situation he said, needed the collaboration of all industry players to find a solution to before Nigeria gets evicted from OPEC due to low contribution.
“How do we now get the national production capacity so that we export more, we consume more? Today, we have huge additional capacity in domestic refining. If we don’t increase the production, we have to get out of OPEC, because you can’t be a net consumer to stay in exporting countries.
“So, the challenge is for all of us. As the refining capacity is increasing, we have to now get production capacity to increase so that we remain the net exporter. We believe this will guarantee and fortify the future,” he said.
Participants at the forum included former Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mr. Funsho Kupolokun; political economist and Founder of Centre for Values in Leadership, Prof. Pat Utomi; Production Geologist at Shell Nigeria, Mr. Adedoyin Orekoya; and Chairman of AA Holdings, Mr. Austin Avuru; amongst others.