The Federal Government on Tuesday hinted at likely hike in the pump price of petrol.
Minister of State for Petroleum Resources Timipre Sylva urged Nigerians to be ready to bear the pains of increased petrol price as crude oil price climbs above $60 per barrel.
The price of a litre of petrol is between N160 and N165, the price set when crude traded just above $43 per barrel four months ago.
Sylva spoke at the launch of the Nigerian Upstream Cost Optimisation Programme (NUCOP) in Abuja.
Also speaking at the event, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) – an affiliate of the Trade Union Congress, stated this amid concerns that the government may increase the price of premium motor spirit (otherwise known as petrol) following increase in the global price of crude oil to $60 per barrel.
PENGASSAN President Festus Osifo said there must be cost reduction in the oil and gas sector.
Osifo said: “Speaking about cost reduction in the oil and gas industry; it is a good initiative. But, we should look at cost reduction in governance because today the cost of our governance is quite increasing and in a very alarming rate.
“As we are tasking employees in oil and gas industries to come up with initiatives that could reduce our costs, let us also look at the way we have been managing government; the way we have been increasing bureaucracies. This must be looked at because nobody should be a sacred cow.”
Sylva said the Nigerian National Petroleum Corporation (NNPC) cannot continue to bear the cost of under-recovery because there is no provision of subsidy in the 2021 budget.
The petroleum minister noted that while government revenue had improved by the rise in crude oil price globally, it cannot be fretted away in subsidy payments.
Sylva said: “Since we are optimising about everything, NNPC needs to also think about the optimisation of product cost because as we all know oil prices are where they are today, $60.
“As desirable as this is, this has serious consequences as well on product prices. So we want to take the pleasure and we should as a country be ready to take the pain.
“Today the NNPC is taking a big hit from this. We all know that there is no provision in the budget for subsidy.
“So, somewhere along the line, I believe that the NNPC cannot continue to take this blow. There is no way because there is no provision for it.
“As a country, let us take the benefits of the higher crude oil prices and I hope that we will also be ready to take a little pain on the other side; on the side of higher product prices.”
The minister’s position was shared by the Group Managing Director of the NNPC, Mr Mele Kyari.
The NNPC boss noted that although Nigeria, like other countries in the world, was happy about the increase in the price of crude, it comes with a consequence.
According to him, the increase has impacted the price of finished petroleum products anywhere in the world, including Nigeria.
Kyari assured that government was engaging with organised labour to make sure there is a structure that will ensure there is no exploitation of ordinary Nigerians by the vagaries of the market.
He said: “I am sure you must have seen a number of newspaper conversations around the price of petroleum; I am sure we are all happy here that crude oil has hit the $60 mark by Monday and probably growing but certainly not going beyond this voodoo game.
“We don’t see it crossing the $65 per barrel mark. We said $60 now we have reached it and we are getting to $65 but it comes with its consequences.
“One of it is that it has impact on the price of finished petroleum products anywhere in the world, including our country. This is a tough challenge we are dealing with to be able to make sure that we are able to get this country wet; despite all the challenges we have the clear directive of government to deregulate the downstream sector.
The Chairman, Senate Committee, Upstream, Bassey Akpan, said there is a need to take a second look at production cost for Nigeria to remain competitive.
He said the National Assembly was ready to pass the Petroleum Industry Bill this year to ensure the smooth operation of the oil and gas sector.
The Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr Simbi Wabote, said the discussion on cost reduction was long overdue.
Wabote said: “Cost reduction comes with some pain and what’s important is how the business will survive to sustain jobs. Local content is a panacea for cost reduction. There are massive cost savings when Nigerians run the business unlike when expatriates flood the business.”