The Department of Petroleum Resources (DPR) says the pump
price of petrol in Nigeria may rise to N1,000 per litre when the petrol subsidy
regime ends without an alternative energy source.
Last month, Mele Kyari, group managing director of the
Nigerian National Petroleum Corporation (NNPC), had said that the cost of
petrol should be N256 per litre at filling stations without subsidy.
The price of premium motor spirit (PMS), better known as petrol,
currently hovers around N162/N163 per litre.
Sarki Auwalu, DPR director, while answering questions after
delivering a paper titled, ‘A Discussion on the Future of the Nigerian
Petroleum Industry,’ in Lagos, recently, acknowledged that Nigeria was spending
so much on petrol subsidy.
He said eliminating it would require making alternative fuel
available to Nigerians and that failure to do that will plunge Nigerians into
paying higher petrol prices when subsidy is removed.
Auwalu added that Nigerians may be paying as high as
N1,000/litre on petrol when subsidy is removed and when alternative energy or
autogas gas policy becomes fully operational.
According to him, the alternative fuel regime comes with
initial cost as it will lead to spending $400 to convert one vehicle from
running on petrol or diesel to running on either liquefied natural gas (LNG) or
compressed natural gas (CNG).
He explained that converting eight million public vehicles
currently present in Nigeria to gas-powered will cumulatively cost $3.2 billion
to achieve.
He said: “So, to eliminate subsidy, they don’t call it
subsidy anymore now, it’s under-recovery of purchase. So, to eliminate
under-recovery, what you need is alternative fuel. Without an alternative, you
will subject people to higher prices, and that is why we go for price freedom.”
“As at today, there are 22 million cars in Nigeria. Eight
million are for public use. Imagine if you want to convert every car into gas,
the average cost of conversion is $400. Converting eight million cars requires
$3.2 billion. To do that, there are a lot of environmental investors which can
invest and recover from the sale of gas and we are encouraging that.
“Once that is achieved, you will see that PMS can be sold at
N1000. After all, the average distance covered by one-gallon equivalent when
you compare it with LNG or CNG with respect to energy for mobility, is 2.7
against one. One for PMS, 2.7 for LNG or CNG.
“So, with that
advantage, you will see that it creates an opportunity for this industry again.
The issue of subsidy, volume will all vanish, and that is what we are working
towards.”
Auwalu also warned that the rise in Nigeria’s local refining
capacity as seen in the coming on stream of many refineries in the country
without a corresponding increase in the country’s oil production volume may
threaten the country’s membership of the Organisation of Petroleum Exporting
Countries (OPEC).
He lamented that out of Nigeria’s over 7100 reservoirs and
its mature basins, the country was recovering just as low as about 1000.
The DPR director said the situation needs the collaboration
of all industry players to find a solution before Nigeria gets evicted from
OPEC due to low contribution.
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