Nigerians were yesterday told to prepare for some tough decisions next year.
Petrol subsidy will go to save cash for capital projects. This will likely push up price from N87 a litre to the former N97.
“Price of refined products today is N87. It was N97 before it was reduced and we really have to go back to that because we don’t really have the finance to remove it,” Minister of State for Petroleum Resources Ibe Kachikwu said.
“There are lots of safety barometer between the N87 and N97per litre regime between which government doesn’t not have to fund subsidy.
“Yet the prices would be fairly close to what it used to be today. That is the first mechanism we are going to work,”Kachikwu told a joint meeting between the Senate and House of Representatives for the consideration of the 2016, 2017 and 2018 Medium Term Expenditure Framework (MTEF).
According to Kachikwu, “Since August, we have been exceeding two million daily production through stringent monitoring of our production by getting quick fixes to instances of pipelines breaking.
“The internal projection for our system next year is in excess of 2.4m which is coming from enhanced and increased production from NPDC field. A lot of efficiency had really been applied in this regard.
“NPDC will for instance be producing 300, 000 barrels on its own while other partners would process at least 2.2m barrels.
“We would address issues of security and other impediments to the realisation of our target. We are looking at a collective and holistic handling of security issues between the NNPC and the oil majors, with us taking the lead.”
On oil price benchmark of $38, he said, ”The projection at OPEC was along the line of the fact that once we do not interfere in term of production cost, will lead to a southward movement in terms of pricing. “We expect an increase as from early January when we expect it to go up by $45 to $50 per barrel in spite of OPEC projection. We expect it to hit $70 per barrel in 2017.”
On subsidy payment for 2015 he said, “The total subsidy figure for 2015 when taken along with the NNPC will be in excess of N1trn. We can get this specifics but the point is largely that it does not involve NNPC because the agency takes its, off-cuff. We will work towards taking those figures off our budget in 2016. They are critical issues.
“The current pricing work we are doing had shown that there shouldn’t really be subsidy. The government doesn’t need to fund subsidy.
“There is synergy around the removal of subsidy. Most Nigerians we talk to today, would say, that’s where to go.
“I have since left the dictionary of subsidy by going to price modulation which is a bit more technical.
“It is when that mechanism fails that we will begin to look at a total subsidy exit. We believe we could achieve that.”
