Domestic crude refining to save 30% forex allocation on petroleum products – Kachikwu
Ibe Kachikwu, Minister of State for Petroleum Resources on Thursday assured that ongoing efforts to ensure 100 percent refining of crude oil will reduce the foreign exchange allocation by 30 percent.
Kachikwu stated this while addressing Nnanna Igbokwe, chairman and members of the Adhoc Committee investigating the review of pump price of premium motor spirit (PMS) during an working visit to the Federal Ministry of Petroleum Resources in Abuja.
Kachikwu who underscored the significance of deregulation of the downstream sector of the industry, harped on the need for attractive investment going forward, as the sale of crude oil has become unattractive across the world.
In the bid to boost Nigeria’s local refining capacity, he disclosed the three major refining projects underway in Katsina, Lagos and Memorandum of Understanding signed with Agip in the Brass Area to build 150,000 barrels per day.
“But what you see a lot of countries do is that people are moving away from selling crude, they are moving to refining their products and selling out the refined products, whether it is white product, whether it is diesel, whether it is black product and the rest. So people are moving away from this crude exportation.
“What this mean for me is that the demand for investment in the downstream refining and processing facilities are going to be high and the investment capitals are going to be challenged and you are going to have to compete with the rest of the world who been initially been crude exporters.
“It is important that our engagement to the public is key and transparency in that engagement is upper most. The engagement of critical stakeholders is also important. I found out sometimes it is pleasant to arrive at this collective decision. It is repository approach. Products that have been largely deregulated like kerosene, how has that performed
“It is sad for me that today we have had a situation whereby most of the major players are not important product, the NNPC bearing the full bulk, we need to ensure that we move away from that.
“We are projecting with current work we are doing to refurbish the three plus refineries in the country, we have also have assigned an agreement recently, an MoU signed with AGIP to do another refinery in the Brass area a 150,000 barrels refinery was signed two weeks ago.
“We have also in the finishing stages of another refinery potential in Katsina, picking up from Niger, so obviously the momentum in terms of getting into the refining process which is the way it should be is picking up.
“Of course, Dangote refinery in Lagos is also picking up, so, there is a lot of momentum moving towards refining as opposed to selling our crude.
What I see a lot of country do is that people are moving away from selling, they are moving to refining their products,” Kachikwu informed the lawmakers.
According to him, Federal Government is working towards refurbishing the three refineries using private capital, adding that the 2019 exit date for importation of petroleum products is sacrosanct.
The lawmakers had during the interactive session expressed concern over the arbitrary imposition of price on Nigerian consumers following Federal Government’s resolve to remove subsidy.
Speaking earlier, Nnanna Igbokwe, Chairman of the Ad-hoc Committee emphasised the need for Federal Government to put machineries in place to forestall diversion of petroleum products to neighboring countries.
While noting that 95 percent of the petroleum products are being imported by Federal Government while five percent are imported by the private sector, he alleged that some of the oil marketers who buy petroleum products at regulated prices, divert them to neighboring countries where the products are sold at higher rates, at the detriment of the Nigerian citizens.
“In the interim, while making steps to enhance supply of PMS through oil production and shore-up supply of PMS through the Direct Supply Direct Purchase, you need to guide against sabotage of good government’s programmes,” Igbokwe urged Kachikwu.
In furtherance of the assignment of the Ad-hoc Committee, the lawmaker informed the Minister of plans to embark on working visit to Lome, Ghana and other countries with the view to conduct survey of price of petroleum products, and ascertain the actual amount being lost by Nigerian government as bridge cost.
Igbokwe who briefed the Minister of some of the disturbing information emanating from the investigative public hearing, stressed the need for the Executive to engage the Legislature in the process of fixing prices of petroleum products in the bid to forestall public unrest and ensure that Nigerians get value for money.
“We are faced with the challenge that if the quantity of production is fixed through the Medium Term Expenditure Framework, the participation of the representatives of the people in the fixing of price of PMS should involve the Parliament,” the Imo lawmaker said.
KEHINDE AKINTOLA, Abuja
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