The minister of state for petroleum and group managing director of the Nigerian National Petroleum Corporation (NNPC), Dr Ibe Kachikwu, yesterday disclosed that the total subsidy figure in 2015, when taken along with the expenses of the NNPC, was in excess of N1 trillion.
Kachikwu, who made this known an interface on Medium Term Framework Expenditure with the Joint Committee of the Senate and House of Representatives, said the current pricing does not need subsidy funding.
He informed the joint committee that from August this year, NNPC had been exceeding two million barrels daily production through stringent monitoring of production by quickly fixing instances of pipeline vandalisation.
He said: “The total subsidy figure for 2015 when taken along with the NNPC will be in excess of N1 trillion. 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 energy 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.
“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. There are lots of safety barometer between the N87 and N97 per litre regime, which means government does 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 on. It is when that mechanism fails that we will begin to look at a total subsidy exit. We believe we could achieve that.
“From August this year, we have been exceeding two million barrels 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 2.4 million barrels which is coming from enhanced and increased production from Nigerian Petroleum Development Company 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 2.2 million barrels.
“We would address issues of security and other impediments to the realization 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 the oil price benchmark of $38 for the 2016 Budget, Kachikwu said: ”The projection at OPEC was along the line of the fact that once we do not interfere in terms of production cost, it will lead to a southward movement in terms of pricing.
“We expect an increase as from early January when we expect it go up by $45 to $50 per barrel in spite of OPEC projection.
“We expect it to hit $70 per barrel in 2017.”