Mele Kyari, group managing director of the Nigerian National
Petroleum Corporation (NNPC), says the act of removing fuel subsidy from the
2020 budget has saved the government $400 million.
Speaking in an interview with THISDAY Newspaper, Kyari said
it is unlikely that fuel subsidy will return despite the rising crude oil
prices.
The federal government removed fuel subsidy in March 2020
and the Petroleum Products Pricing Regulatory Agency (PPPRA) advises petroleum
marketers on the retail pump price of petrol based on prevailing market trends.
“My personal view is that subsidy should be removed, and the
funds deployed to areas of the economy particularly road infrastructure and
education that need funds,” he said.
“Fuel subsidy is a misallocation of resources and it
benefits mainly people who don’t need it; the rich.
“What we need is an investment that upgrades the general
good of the society and provides access and opportunity for social mobility for
the poor.
“I do not foresee the return of subsidy when oil price
rebounds. Just by removing subsidy in the 2020 budget, the nation is able to
save over $400million.
“The savings would be better deployed to education or
upgrade of the critical infrastructure in the country.”
Kyari said the NNPC has adopted a three-pronged approach to
realise its target of zero refined fuel by 2024.
Through its ‘revamp, restructure and encourage’ approach,
Kyari said the NNPC is determined to see that the country’s refineries are back
to their nameplate capacities.
He explained that the NNPC is considering various options to
revamp the refineries. He listed the options to include third party operational
and maintenance model; long-term lease or a joint venture model similar to the structure
obtainable today at the Nigeria LNG.
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