Fuel subsidy remains an unsustainable drain on Nigeria’s economy – NNPC, others


The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr Emmanuel Kachikwu, and other stakeholders on Thursday argued that fuel subsidy policy remains an unsustainable drain on the economy and called for speedy deregulation of the nation’s oil and gas sector.
The NNPC, GMD said that “Subsidy creates distortion in government revenue distribution as a result of round-tripping and unnecessary carryover of expenditures every year in a way that is difficult for government to control or sustain.”
He disclosed this while presenting a keynote address titled “Energy Crisis and Sustainable Development in Nigeria: The Way Forward”, at the National Association of Energy Correspondents (NAEC) Conference held at the Eko Hotel & Suites, Victoria Island, Lagos.
The NNPC boss, who was represented by Bolanle Ashafa, Acting Managing Director of Nigeria Engineering and Technical Company (NETCO), said deregulation would encourage domestic private sector participation and inflow of foreign investments.
He contended that deregulation will also provide a fair deal for Nigerians from the abundant petroleum resources, through fair product prices for consumers, full cost recovery, and reasonable margins for operators.
“Subsidy accounted for 20 percent of the federal government budget in 2013. Implementation of the policy will entrench efficiency in product usage, product availability and effective competition among investors, hence ending products shortage.
“However, critical enablers such as security of supply and distribution infrastructure must be assured to guarantee the availability of the petroleum products at affordable prices.”
Kachikwu said that the corporation was fully committed to reforming existing refineries, to boost domestic petroleum products supply, adding that the refineries had been re-streamed, but were yet to attain optimal capacity in production.
“Removal of price control mechanisms is deemed imperative to ensure full growth of the sub-sector, by allowing private stakeholders to complement the effort of government in developing the industry,” he said.
He reassured Nigerians that NNPC would continue to …Read More

Source:: New Mail