Vice President Yemi Osinbajo has joined the race to convince Nigerians why fuel subsidy was removed.
According to him, with oil earnings dipping to $550 million in April, the nation could no longer afford $225million required for fuel importation alone.
Osinbajo in his letter to Nigerians titled “The Fuel Pricing Debate: Our Story”, he reiterated that the NNPC had borne the sole burden of importing fuel following private marketers refusal to do so.
He explained that besides the short term depletion of the Federation Account, which is where the FG and states are paid from, and further cash-call debts pilling up, NNPC also lacked the capacity to distribute 100 per cent of local consumption around the country, stressing that the oil firm was responsible for only about 50 per cent, saying this was responsible for the lingering scarcity.
The Vice President said while the Federal Government expects competition to attract more private refineries, it also expects prices to drop with all the nation’s refineries working at full capacity.
He explained that currently even if all the refineries were to work optimally, they can only produce 40 per cent domestic needs, adding that the Federal Government was targeting to produce 70 per cent for local consumption by the fourth quarter of 2018.
According to him “I have read the various observations about the fuel pricing regime and the attendant issues generated. All certainly have strong points.
The most important issue of course is how to shield the poor from the worst effects of the policy. I will hopefully address that in another note.
“Permit me an explanation of the policy. First, the real issue is not a removal of subsidy. At $40 a barrel there isn’t much of a subsidy to remove. In any event, the President is probably one of the most convinced pro-subsidy advocates.
“What happened is as follows: Our local consumption of fuel is almost entirely imported. The NNPC exchanges crude from its joint venture share to provide about 50% of local fuel consumption. The remaining 50% is imported by major and independent marketers.
“These marketers up until three months ago sourced their foreign exchange from the Central Bank of Nigeria at the official rate.
However, since late last year, independent marketers have brought in little or no fuel because they have been unable to get foreign exchange from the CBN. The CBN simply did not have enough. (In April, oil earnings dipped to $550 million. The amount required for fuel importation alone is about $225million!).”