Fuel subsidy cost Nigeria $65bn in 5 years – Kachikwu

Minister of State for Petroleum, Dr Ibe Kachikwu
Minister of State for Petroleum, Dr Ibe Kachikwu

Nigeria incurred subsidies for petrol and kerosene estimated at $65bn between 2011 and 2015, Minister of State for Petroleum Resources, Dr. Ibe Kachikwu has said.

The minister said this on Thursday in a presentation at a two-day African modular refinery forum at the forum; made up mostly of modular refinery manufacturers, partners, clients and contractors, organised by the Modular Refiners Association of Nigeria (MRAN), in partnership with the Department of Petroleum Resources (DPR).

Represented by the Deputy Director, Engineering and Standards of the DPR, Engr. Olumide Adeleke, Kachikwu said this amount excluded an estimated $6bn the country lost from the vandalism of oil and gas infrastructure.

The minister further said that had the subsidy bill been properly channeled, it could have financed the entire investment required to realise the Vision 20:2020 target of 50 per cent national refining capacity of crude oil produced in Nigeria, stimulated employment and economic growth and ensured significant reduction in the federation foreign exchange expenditure for petrol imports.

He also lamented that despite the country’s four refineries, Nigeria had been plagued with a continuous import cycle of 92 per cent of its daily consumption.

“The foreign exchange requirement for importation of petroleum products is estimated at $28bn (N3.35tn) annually, with 40 per cent of the total amount (N1.34tn) dedicated to financing the logistics of importation,” Kachikwu said.

Despite these challenges, the minister said that his objective remained to attain 50 per cent domestic refining capacity by 4th quarter of 2018 and 100 per cent domestic refining capacity by 4th quarter of 2019.

Acting President, Prof. Yemi Osinbajo, said at the event that the Federal Government was working to develop a robust set of guidelines that would help investors seeking to establish modular refineries to do it well.

He said the government would now require prospective investors seeking licence to operate modular refineries to present sensible business models before licences could be granted to them.