Thursday, 19 May 2016

PETROLEUM MINISTER’S BRIEFING TEXT HAS INDIRECT MOTIVE TO COLLECT IMF LOAN, LABOUR EXPOSES



By: Valentine Adese and Ifeanyi Okonkwo

The striking workers in Plateau State have decided to release the press briefing document of the Federal Ministry of Petroleum on 11th May, 2016.

According to some of the striking workers, they want Nigerians to know that some of the conditions spelt out by the press briefing text are INTERNATIONAL MONETARY FUND (IMF) conditions which the Buhari led Federal Government want to implement indirectly. 

According to their advice, “Nigerians should read along the line especially paragraphs 7 which relates to the benefits of the price increase in the text.”
The unedited text is as below:


     Federal Ministry of Petroleum Resource
       New Framework for PMS Supply and Distribution
Briefing by: Hon. Minister of State, Petroleum Resources, May 11, 2015.

Urgency of the current fuel situation
1.      Unavailability of forex and inability to open letter of credit has forced marketers to stop product importation and imposed over 90% supply on NNPC since October 2015 in contrast to the past where NNPC supplies 48% of the national requirement.
2.      NNPC does not have the resources for and is not designed to meet this increase in supply, this has resulted in the current fuel situation across the country.
3.      NNPC has continued to utilize crude oil volumes outside the 445,000 barrels/day thereby creating major funding and remittance gaps into the federation account.
4.      There is no provision for subsidy in 2016 Appropriation. As at today, the current PMS price of N86.50 gives an estimate subsidy claim of N13.7 per litre which translates to N16.4 Bn monthly. There is no funding nor appropriation to cover this.
5.      Renewed insurgency and pipeline vandalism in the Niger Delta has drastically reduced national crude oil production to 1.65 million barrels per day as at today against 2.2 million barrels per day planned in the 2016 budget, further reducing income to federation account and also affecting crude volumes for PMS conversion and impacting FG forex earnings.
6.      Resultant fuel scarcity has created an abnormal increase in price resulting in Nigerians paying average of N150-N300 per liter as prevalent hoarding, smuggling and diversion of products has reduced volumes made available to citizens.
In the absence of available forex lines or crude volumes to continue massive importation of PMS, it is clear that unless immediate action is taken to liberalise the petroleum supply and distribution, queues will persist, diversion will worsen and the current prices will spiral out of control.
BENEFITS
1.      Permanently eliminates subside payment (N1Tn in 2015-16.5Bn April-Date).
2.      Ensure 100% FAAC payment on allocation 445,000 bpb and potential additional revenue stream which can be tailored towards palliatives.
3.      Solves fuel scarcity crisis by ensuring availability of products at all locations of the country.
4.      Ensure market stability and improves fuel supply situation through private sector participation.
5.      Reduce hoarding, smuggling and diversion substantially and stabilize price at the actual product price.
6.      Encourage Investments in both Refineries and Retails (potential $2-3Bn in 2016).
7.      Stabilises economic fundamentals and allow access to Development Loans etc.
8.      Creates Labour market stability (will potentially create additional 200,000 jobs through the new investment and prevent potential loss of nearly 400,000 jobs in existing investments).
SOLUTIONS  
1.      Free out private marketers and any Nigerian entity willing to supply PMS to source for their Forex exchange and import PMS to ensure availability of products in all locations of the country.
2.      New PMS Price will today be introduced by PPPRA in accordance with the price modulation framework reflective of the actual price of the secondary sources of foreign exchange. All products will be sold within the recommended PPPRA price band to be reviewed periodically.
3.      PPPRA and DPR will be further empowered to ensure level playing ground, strict compliance with market rules by all stakeholders and consumers protection.   
                                     WHAT IS YOUR OPINION??     

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