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National AssemblyGreen ChamberFuel Scarcity: NNPC lists Russia-Ukraine War as cause of hike, shortage

Fuel Scarcity: NNPC lists Russia-Ukraine War as cause of hike, shortage

 

OrderPaperToday – The Group Managing Director of the Nigerian National Petroleum Company (NNPC) Ltd, Mele Kyari, has on Tuesday, said that the Russia-Ukraine war was affecting the supply of petroleum products across the world.

Kyari also hinted that most major oil companies were shutting down due to the energy transmission to eliminate fossil fuels. He, therefore, called for urgency in increasing the production of crude oil in the country in order to tackle the rising price of diesel and cooking gas.

“Besides the fact that the Russia-Ukraine war was affecting the supply of products across the world, most major oil companies were also shutting down due to the energy transmission to eliminate fossil fuel,” he said.

The NNPC GMD made these allusions when he appeared before the House of Representatives Committee on Petroleum (Downstream) investigating the rising cost of the products, headed by Abdullahi Gaya (APC, Kano).

This, the NNPC CEO attributed to non-functioning refineries in the country.

READ ALSO: ‘Sallah holidays are responsible for fuel queues in Abuja’ – NNPC GMD, Kyari

Kyari, also rued acts of vandalism on oil facilities, which he said was responsible for the decline in production. According to him, “three days ago, there was a massive attack on one of their facilities and 27, 000 barrels were lost overnight.”  

He noted that the unavailability of Foreign Exchange (FX) as a result of inadequate exports, was another reason for the problem, adding that interventions were in place to ensure production improves in July to address some of the FX challenges. 

Kyari also cautioned against suggestions that subsidies should be made available for diesel.

READ ALSO: NNPC: ‘We apologise, fuel scarcity will be over in 2 weeks’

“Today we are net importers of everything, perhaps with the exception of food. So, when you don’t export you cannot have foreign exchange. Therefore, there is a limit to the call on the CBN (Central Bank of Nigeria) Governor to provide FX.

There is a limit to what he can do, because for as long as we are not productive. The only solution is to restore crude oil production in this country. Our current crude oil production including condensate is 1.49 million barrels.

The budget level as you are all aware is 1.8 million barrels. So we cannot meet it today. Today we have over 205 illegal refinery sites.

There are over 295 insertions on our crude oil production line. We have over 200 illegal connections on our oil pipelines. Companies shut down because there is no further need to produce and that is what we are containing. There is massive intervention happening and we believe that we would restore the production through the intervention that we are doing.”

READ ALSO: Jet A-1: Reps initiate probe into sudden scarcity and cost of aviation fuel

Chief Executive of the Nigerian Midstream & Downstream Authority Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, also attributed the rising cost of crude oil to the Russian-Ukraine war.

He said to address the problem, the required amount of FX for importation of the petroleum products has to be made available to the genuine importers at CBN official rate.

Ahmed also called for the establishment of more local refineries and cooking gas (LPG)  processing facilities to meet domestic demands and increase LPG supply from major domestic producers.

READ ALSO: Fuel Scarcity: Reps to probe NNPC, SON, Customs, others over importation of bad fuel 

National President of the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), Oladapo Olatunbosun, said a reason for the rising cost of cooking gas was as a result of sharp practices in the industry.

He said unlike diesel which is imported, cooking gas was produced in the country, but profiteering was a problem.

According to him, “there is a lot of profiteering going on in the LPG business. The kind of market we are seeing today which the terminal owners are seeing, I must be sincere, there is a lot of cross-border trading.

There are infrastructural challenges, but there are still human interventions that we need to control. How many gas plant owners are actually off-takers? There are production going on in Edo in Oredo. How many of them are they selling?

People come from different angles who are portfolio investors, they buy gas and they hack on it, the price goes up,” he said.

READ ALSO: Reps inaugurate Committee to determine country’s actual daily fuel consumption

He said the problem can be addressed by taking the product directly to the people that need it.  Some marketers who were at the hearing appealed for the provision of FX from the CBN at a good rate to help address the challenge.

Earlier, the lawmakers took turns to air their opinions on the matter; urging the NNPC to urgently intervene so as to reduce the suffering endured by the ordinary Nigerians who are fast losing patience with the government.

According to Adedeji Babajide (APC, Oyo), “Nigeria is going through a bad time. For crying out loud, we are an oil-producing nation and you can not sit down here and say we do not have a solution; then it is a national embarrassment.

We have to take this seriously. We need to put a time frame on it so that the common man can easily exist. Very soon we will not be able to work the streets again. The masses are feeling the heat of the hike.” 

 

Lizzy Chirkpi
Lizzy Chirkpi
Lizzy Chirkpi has a BA in French and is a senior reporter at OrderPaper. She has keen interest in photojournalism and video documentary. She's also a writer and author of a book, "Pourquoi Le Francais." She likes reading, traveling and watching movies.
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