There will be no more oil subsidy going forward – NNPC. Nigerian National Petroleum Corporation has said it will no longer pay fuel subsidy.
Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari on Monday said that the Federal Government has eliminated subsidy payment in Nigeria.
According to Vanguard, Kyari spoke in an interview monitored on a television programme in Abuja, Kyari said,
“There is no subsidy and it is zero forever. Going forward there would be no resort to either subsidy or under recovery of any nature. NNPC will play in the marketplace, it will just be another marketer in the space.But we will be there for the country to sustain security of supply at market price.”
“There is no challenge with that. The buyers have choice now. Choice of quality and choice that is associated with distance. These two factors will determine which crude oil consumers buy. Our major source of trade is Europe, followed by Asia, particularly India. “And in times like this when crude oil prices go down, what buyers do is to buy the cheap crude available and take them into storage. So the way to gauge this is when your buyers do not return the crude after six days of purchase. For by contract, after allocation of a cargo, the buyer is supposed to come back to you within six days and say I cannot take this. There is a legitimate right to do that.“But none of our partners have come to tell us that they cannot take our crude and it is way pass the six days. This means that they have found value for this crude. Value here does not necessarily mean taking it into the refineries, it can mean taking it into storage or even floating it in the vessels. That is why people are now using these vessels as storage facility because they know that a change in price will come very shortly.“When we say that our crude is stranded, it means that at a point in time when traders are not able to tell you where they are taking it to. It does not mean they did not buy it. It means that you have to watch, although there is concern because they have not come back to take the next cargo.“When we reported stranded cargo it means that our partners are unable to find a way around it as at the point in time we reported. But I am happy to announce that that number has gone down substantially, I don’t have the exact numbers for today, but it is now less than 20.”
“The change in price as at this morning means that people are recovering from the impact of COVID-19 and it means that countries will go back to work and consumption will gradually recover. But if the pandemic does not reduce to a point where you have at least 75 per cent of people coming back to work, then you will have a challenge. But once about 80 per cent of the world population return to work, then our crude will be sold and there are no concerns.“In every country, like in our own country, we have some facilities that produce at more than $30 per barrel and there are also those that produce at below $20, say $15, $16, $17 per barrel. So at times like this you focus on assets that produce at low costs. “
“The key issue in crude oil business is market fundamentals of demand/supply. I believe COVID-19 will subside and countries will come back to life. I don’t see oil price going below the $20 we saw last week. I’m certain, all things being equal, oil price will bounce back.”