Nigeria cannot sustain subsidy; FG should not control oil price – Kachikwu

By Wale Odunsi

The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr Emmanuel Kachikwu, has said the nation cannot sustain fuel subsidy, insisting on the deregulation of the nation’s oil and gas sector.
He stated this in his 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, yesterday.

“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 said.

Represented by Mrs Bolanle Ashafa, Acting Managing Director of Nigeria Engineering and Technical Company (NETCO), Kachikwu said deregulation would encourage domestic private sector participation and inflow of foreign investments.

“Deregulation will 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.”

According to him, “Subsidy accounted for 20 per cent of the federal government budget in 2013. Speedy implementation of this policy in Nigeria would go a long way in encouraging inflow of private sector and international investment; ensure that Nigerians derive fair deal from the abundant petroleum resources in the country through fair product prices for consumers and full cost recovery and reasonable margins for operators.

“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.

“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.”
The GMD reassured Nigerians that NNPC would continue to maintain stability in the supply and distribution of petroleum products nationwide.

“We will focus on the need to address infrastructure constraints, to ensure sustainability of gas and petroleum products supply and distribution nationwide. We will be tackling infrastructure gaps and promoting inclusive growth, as well as capacity building,” he said.