Minister-of-State-for-Petroleum-Chief-Timipre-Sylva.
… As Sylva says ‘We must deregulate to move Nigerian economy forward’***
The Federal Government says it has facilitated the use of a tracking device to track every truck loading petroleum product from any of its depots as part of efforts to nip smuggling in the bud and arrest culprits.
Minister of State for Petroleum Resources, Chief Timipre Sylva, said this at a forum organised by the newsmen to gauge the achievements recorded in the oil and gas sector in the last two years.
Sylva noted that a lot had been achieved in the industry but that the activities of smugglers had continued to overshadow the successes especially as it concerned fuel subsidy and the quantity of petroleum products consumed in the country.
“This is one big question that we try to answer ourselves because when we look at the number of load-outs from our depots every day, we know that we don’t have that level of consumption of petroleum products in Nigeria,” he said.
According to Sylva, time has come for the government to track products that go out from its depots to ensure they deliver straight to designated filling stations in the country.
He said the era of smuggling products across the country’s borders was over as it negatively contributed to the high number of litres of petroleum products said to be consumed in the country on a daily basis.
“We have been able to put a tracking system to track the trucks that load from the depots, so that we are sure that when they load products from the depots, they take it straight to the filling stations.
”When you say that Nigerians are consuming 60 million litres, and you look at the number of cars on the Nigerian roads, you will know that those 60 million litres cannot be possibly consumed in Nigeria.
“But we have a situation where our price for products here are cheaper than the price across the border; sometimes the price across the border is double or even more than double our own price here.
“So, it’s an opportunity for profit, and some people will want to take our product and sell it across the border to make extra money.
“That is what has been happening and it’s really distorting our own system here because if you say you are going to be subsidising the product, the subsidy is meant to be subsidising for Nigerians not those outside Nigeria.
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“But the way it is now, we seem to be subsidising the whole of Africa, and how can we sustain such a move; that is why the subsidy amount is going up every day,” Sylva said.
He also said that security agents, the Economic and Financial Crimes Commission (EFCC) and the Nigerian Customs Service (NCS) would swing into action to ensure the smugglers were apprehended and brought to justice.
“We know that our consumption data is inflated, not by us but because of the leakages which we are trying to control.
“If you have a structure as it is today, and the incentive the smugglers get is too high, it makes them not to stop unless the government is ruthless, and that is why we are involving security agencies.
“This month maybe they will smuggle to Niger Republic and next month somebody will discover a route to Chad and another person is smuggling to Cameroon and Benin Republic, while some could go as far as Togo or Ghana.
“And this is why our perceived consumption figure is going up every day and if we continue to do that and keep our petrol price low, it will be difficult for us to progress.
“In some communities, we have a situation where someone’s farmland is in Cameroon and their home is in Nigeria, so how do you stop that person from not crossing the border,” Sylva added.
The petroleum minister further said that apart from tracking device systems, other technological solutions would be applied to get the problem solved in the shortest time possible.
In the meantime, Chief Timipre Sylva, the Minister of State for Petroleum Resources, has reiterated the need to deregulate the downstream sector through market-driven pricing of products to boost the country’s economy.
Sylva made this known when he featured at the newsmen forum on Sunday in Abuja.
“I will say that my stand on fuel subsidy and deregulation is well known. I strongly believe that for this country to move forward, for our economy to make the progress it desires, we need to have a market-driven pricing of products.
“A situation where you produce something at a certain cost and you have to sell it at a lower cost to people because you are taking some of that burden off the people is not the best.
“It is a very desirable thing but it is also not too sustainable because what happens is that you produce it for N10, you sell it for N5; tomorrow, you produce it again at N10, you add N5 from somewhere, produce it again at N10 and sell it for another N5.
“So, the losses increase and compound on a daily basis and those accumulated losses have brought us to where we are,’’ he said.
According to him, people’s view that if the refineries are working, importation of product will stop is not the real issue on ground.
Sylva said that subsidy was part of the things that made the refineries to stop operating in the country.
“Part of the reasons why the refineries were not working is subsidy because a refinery that is producing something at a certain cost and selling at a loss, how can it sustain itself.
“Over the years, the refineries couldn’t sustain themselves and all of them died. So, if you do not deregulate, you will find out that even the refineries, if you fix them today, they cannot be commercially operated because the refineries need maintenance and they need to run.
“If you are producing something and they are selling at a certain subsidised price, it cannot work that is why you see that the sector is not growing at all,’’ he noted.
The minister said that Dangote Group for example, sited its refinery near the sea to aid exports and to enable it make more money for sustainability.
“If he sells within Nigeria in this subsidised environment, he will not breakeven. So, that is the way it is and we must look at it because, I know that a lot of Nigerians think that we must carry on like this but in the end, I think it is better for us to deregulate,” he said.
He described as unfortunate people’s perception about subsidy, making the common man on the street to begin to fight government “but the subsidy never favours them”.
“It is actually in the interest of the common Nigerian to ensure that some people do not just profiteer on them, which is what has been happening.
“You must have heard of all the subsidy scams few years ago, people were making billions on these same subsidies.
“And when you say you want to take it out, the common man is the one on the street but at the end of the day is it the common man that is benefiting? I don’t think they are the biggest beneficiaries,’’ he said.
According to Sylva, all the fuels that are connected to the common man have been deregulated.
“Kerosene, which the common man uses to cook in a stove and used in the village to burn the fire wood is deregulated. The diesel that is used to move the trucks that move food from farm to market is deregulated; but petrol which is the preferred fuel for big people is the fuel that have defied deregulation.
“But at the end of the day, I believe that it is better for us because if we are able to deregulate, then we can save money.
“First, you can imagine the savings we will make as far as Foreign Exchange (FOREX) is concerned and of cause, it will bring down the pressure on FOREX.
“People will be able to access FOREX for imports, government will not be the one providing foreign exchange for the importation,” he said.
According to him, since the government will no longer be subsidising, all that money that will be gained, which is over a trillion naira yearly, instead of being burnt in cars, will now be used for development.
“You can imagine how much money the federal and state governments will have at their disposal if there is deregulation,’’ the minister said.