85 percent of NNPC losses from PPMC – Kachikwu
The Pipelines and Product Marketing Company (PPMC) is responsible for about 85 percent of the Nigerian National Petroleum Corporation’s (NNPC) financial looses according to Minister-designate and Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Ibe Kachikwu adding that complete unbundling of the subsidiary with specific targets for the new heads of the unbundled companies with mandate to operate within their budgets will help to tackle such problem.
Speaking over the weekend at a luncheon organised in his honour by The Petroleum Club, Lagos, Kachikwu said that petroleum subsidy payments must be done regularly with plans to review the subsidy system which will enable government to bring the amount down from N20 to about N5 per litre.
“If we are going to continue with subsidy, we must ensure that the subsidy payments are made on a monthly basis to avoid accumulation”, he said adding that the question of whether Nigeria consumes up to 40 million litres of premium motor spirit (PMS) per day remains a doubt as findings so far show that the country does not consume up to that quantity of PMS”, he said adding that the issue of subsidy creates a lot of emotion that government will have to put a lot of palliatives in place before attempting to remove it.
The minister designate also said that there are plans to source $500m, which will be repaid over a period of about nine years, to fix all the nation’s crude oil refineries which have all been shut down. According to him, the Port Harcourt Refinery, which was refining crude some weeks ago had stopped working and had since been shut down while the Warri and Kaduna refineries remain shut.
Kachikwu said that there the problems of the petroleum industry in Nigeria are more serious than acknowledged. He said that Nigeria’s oil industry is faced with declining production and increasing cost adding that Joint Venture (JV) production decline is alarming.
“There is a lot of urgency now. Unless the petroleum industry gets sorted out, not much can happen to Nigeria’s economy”, he said.
He revealed that since his appointment as the GMD of NNPC, he had been inundated with requests for allocation of Low Pour Fuel Oil (LPFO) and other products from the refineries.
“The time of allocation of products to people by the NNPC is over. That is clearly not my job. My period, no matter how short, will not be characterised by favoritism. I like people to get rich but people should get rich based on ideas they bring to the table and not based on allocation paper given to them by government. There is no space for armchair and brief-case businessmen”, he said.
The Chairman of Petroleum Club, Otunba Funsho Lawal in his welcome address said that the oil and gas industry is facing a lot of challenges, both locally and globally. Some of the challenges facing Nigeria’s oil and gas sector, according to Lawal include non-passage of the Petroleum Industry Bill (PIB) after eight years; inability of the NNPC to meet its cash call obligations to the joint venture partners; subsidy and deregulation issues; slump in oil prices, which have led to dwindling crude oil revenues to the federal government and gas supply challenges.
Frank Uzuegbunam