NNPCL GCEO, Kyari justifies smuggling of petroleum products from Nigeria to neighbouring countries  

Oredola Adeola
The Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, has justified the continued smuggling of petroleum products, especially Premium Motor Spirit(PMS) also known as Petrol, from Nigeria to other neighbouring countries, insisting that as long as there is arbitrage in the pricing of the commodities in Nigeria, smuggling and round-tripping will never stop.
The NNPCL GCEO made this known on Wednesday, while making a presentation on the topic  “fuel subsidy and its impact on the economy”,  during the Legislative Transparency and Accountability Summit organised by the House of Representatives Anti-Corruption Committee, on Wednesday, in Abuja.
According to him, as long as there is arbitrage, NNPC Limited cannot be held responsible for some of the challenges associated with the smuggling of PMS and the rising subsidy cost.
He said, “About N290 is paid as subsidy on every litre of petrol sold in the country. Under these circumstances, it is impossible for anyone to avoid all the wrong things that are happening in the downstream sector. Round-tripping, cross-border smuggling, and document forgery are common phenomena.
“As long as arbitrage is there, you will continue to have these issues and you cannot hold NNPC Limited accountable for it because it is a value chain that involves everything and everybody,” he said.
Commenting on the inability of the NNPCL to remit oil revenue to the federation account, the GCEO told the Committee members that Nigeria is unable to pay for subsidy, hence, the NNPC limited offsets the obligation with royalty, tax, and profit. According to him, we cannot eat our cake and still have it.
He said, “Revenue not delivered to the federation account – why would an institution deliver revenue to the federation account? Without mincing words, you cannot eat your cake and have it.
“Today, NNPC by law is required to guarantee energy security, particularly by making sure that petroleum products are available across the country.
“We have made a law, the Appropriation Act provides subsidies on petroleum, but the state does not have the money. So, when I give you an invoice and you cannot settle it, therefore, you have no way of settling it except through offset against fiscal obligations.
“What fiscal obligations does the NNPCL have? They are royalty, profit oil, and taxes. You cannot deliver on these fiscal obligations and still import products and sell at a sub-market price,” Kyari cautioned Nigerians.

Highlighting some of the challenges that the Corporation has been facing since it began the war against oil theft and pipeline vandals , Kyari informed the participants at the Summit that there are attempts on his life, noting that he has been receiving threatening messages due to the discovery of about 295 illegal connections to oil pipelines.

According to him, those people opposed to changes in the sector have resorted to threats in a bid to have their way.
He said, “Without mincing words, I want to say that this industry is on a threshold of change, there is massive change going on and it is very expensive and of personal cost to many people including myself.
“There are threats to my  life, I can say this, I have several death threats but we are not bothered about this. We believe that no one dies unless it is his time. Every human being will die someday.
“But this is the cost of change. When people move away from what they are used to something that is new that will take away value and benefit from them, they will react,”

Kyari further said , “We have destroyed thousands of illegal refineries in the last few months. A connection to the main pipeline carrying crude to the terminal for export was also discovered.

He however established that the battle against oil thieves was yielding results as daily production has risen to about  1.4million barrels per day, adding that not all the 700,000 barrels of crude lost daily were stolen.

He said, “We had a situation where our crude oil production came down to 1.1 million barrels from 1.8 million, but the truth is that not all of them were stolen. Let me clear the misconception that the remaining balance is stolen.“Oil companies have stopped injecting oil into the pipeline the moment they discover it can’t get to the terminal.

 

“This was why at the peak of production, we lost over 200,000 barrels per day. The companies shut in production when they discovered that their products are not making their ways  to the terminal,” he said.

 

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