Abuja – Group Managing Director of Nigerian National Petroleum Company (NNPC) Ltd, Mele Kyari, on Tuesday told lawmakers that the only way to tackle the rising prices of diesel and cooking gas is to increase the production of crude oil in the country by tackling vandalisation of oil installations in the Niger Delta region.
Kyari stated this while addressing members of the House of Representatives Committee on Petroleum (Downstream) headed by Hon. Abdullahi Gaya, over the rising cost of the products.
He also attributed the problem to the dysfunctional refineries in the country, adding that besides the fact that the Russia- Ukraine war was affecting supply of products across the world, most major oil companies were also shutting down due to the energy transition to eliminate fossil fuel.
He also listed the unavailability of foreign exchange (FX) as a result of inadequate exports as another reason for the problem.
He said interventions were in place to ensure production improves in July to address some of the FX challenges, just as he cautioned against suggestions that subsidy should be made available for diesel.
“In our country, we do not produce AGO (diesel) and we regret that our refineries are not working. Are we doing anything about it? Yes. We are working on getting them back to work.
The reason is simple. We do not want to go the long route of doing comprehensive turn around maintenance because we are concerned. “Today when you buy gasoline or AGO you must pay for it.
The traders don’t care. The only way you can pay for it today in the market is that you must have USD to pay.
We do not have another means of getting USD more reliable than the production from the crude oil that we sell.
“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 to CBN 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.
“If we cannot take this back, we cannot even have the FX to fund even the AGO importation. So it is not possible.
I can assure you that by the end of July, we would restore the production to a level that we can say we are comfortable with and hopefully address some of the FX issues.
When you go to the FX window of the CBN if the dollar is not available, if you give it out, it is simply another FX subsidy.”
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