Mele Kyari, the Managing Director of the Nigeria National Petroleum Company Limited,
has said that the new administration of President Bola Ahmed Tinubu has directed the provision of certain palliatives to help cushion the adverse impact of the subsidy removal on the vulnerable Nigerians.
He maintained that there’s no going back on fuel subsidy removal, saying government has not made any financial provisions for fuel subsidy since 2022.
Kyari,who spoke when he met Chairman and members of the All Progressives Congress (APC) National Working Committee (NWC) at the party’s national secretariat in Abuja, said while subsidy existed in paper in the 2022 budget, no releases were made to the NNPC by the federal for fuel consumption resulting in N2. 8 trillion indebtedness to the NNPC.
He cautioned that on account of the sensitive role the NNPC plays in guaranteeing borrowing for both the federal and state governments, the company cannot default in its financial obligations to creditors.
He added:”There was subsidy in 2022 but in 2023, not a single naira was provided for the purpose of financing the subsidy. And ultimately while we held back our fiscal obligations . We still have a net balance of over 2.8 trillion naira that the federation should have given back to the NNPC. For any company, when you have negative 2.8 trillion naira, there is no company in the whole of Africa that will lend to you. You cannot have receivables. The provision of subsidy is there but absolutely there is no funding for it. It means it is only on paper. So, it doesn’t exist…
“This is exactly where we are today. So we no longer can bear it because no liquidity. If we continue we will run into defaults and the defaults of NNPC is the default of Nigeria. Once NNPC goes into defaults and liquidity, it affects every borrowing done by the country.
Even the sub-nationals. Your lenders will come back to you and say your country cannot longer pay.”
He explained that,sustaining the subsidy regime would mean putting aside N400 billion monthly that could have gone into capital project to service a subsidy that benefits a few.
He spoke on the likelihood that the removal will stoke up already double digit inflation in the country, Kyari said the situation is same in other countries assuring that the country will cross the bridge when it gets there.
“In many country’s, there are very many factors that can make inflation to go up. When it does, prices goes up. We have to deal with it, live with it. You have to increase your production and consumption. And you have to change that balance. You have to change the conversation around the GDP growth and so on.
“And Mr President target is to have 7% growth of GDP. You cannot have this if you have this distortion in your demands and consumption pattern. Very many of us here have at least two cars in our houses including myself. And all of us including me in the elite class, that we are the ones with the SUVs 2, 3, 4 and even our families do.
“And when you buy fuel of 100 liters in an SUVs, you are literally subsiding 3 liters with 100 naira for all of us. Just imagine what happens when you can actually preserve that? Even the consumption itself is clearly screwed in locations and states where the level of economic activities ard higher than the others. It is very understandable and that is why people can afford Abuja, Lagos, Porharcourt, and Kqno. So over 38% of the total fuel distributed in this country ends up in this places”.
He assured that government will have to intervene to cushion the effect of the wholesale removal of the fuel subsidy,adding that the new government in putting together some form of palliatives to that effect