The Nigerian National Petroleum Corporation yesterday strongly advocated the complete halt in the payment of subsidy on petrol.
Although the corporation admitted that it was aware of the massive nationwide protests and industrial actions that took place in January 2012 when the Federal Government announced the complete withdrawal of subsidy on petrol, it however maintained that the continued payment of subsidy was not sustainable.
Subsidy is the difference between the expected open market price of fuel and the actual or retail price that is paid by consumers for the product at petrol stations as regulated by the Department of Petroleum Resources.
The Group Coordinator, Corporate Strategy and Planning, NNPC, Timothy Okon, explained that since government does not control the prices of crude oil, its fluctuation often creates fiscal instability in the country, a situation that impacts negatively on Nigeria’s revenue.
Okon spoke at the 2015 Oloibiri Lecture Series and Energy Forum organised by the Society of Petroleum Engineers in Abuja.
He noted that when crude oil prices came down to about $40 per barrel, subsidy was not paid during that period, as the landing cost of the product was either equal of even lower than its market value.
Okon explained that subsidy on petrol creates uneven distribution of revenue, round tripping and unnecessary carry-over of funds from one year to another in a manner that was difficult to control by the Federal Government.
“So, from the technical analysis made, it is obvious that subsidy is real. And from our analysis, we look at it as something that should go because it is not sustainable,” he said.
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