Mele Kyari, group managing director of the Nigerian National Petroleum Corporation (NNPC), says the act of removing fuel subsidy from the 2020 budget has saved the government $400 million.
Speaking in an interview with THISDAY Newspaper, Kyari said it is unlikely that fuel subsidy will return despite the rising crude oil prices.
The federal government removed fuel subsidy in March 2020 after crude oil prices dropped, making the landing cost of petrol less than the N145 retail price peg.
The Petroleum Products Pricing Regulatory Agency (PPPRA) now advises petroleum marketers on the retail pump price of petrol based on prevailing market trends.
“My personal view is that subsidy should be removed, and the funds deployed to areas of the economy particularly road infrastructure and education that need funds,” he said.
“Fuel subsidy is a misallocation of resources and it benefits mainly people who don’t need it; the rich.
“What we need is an investment that upgrades the general good of the society and provides access and opportunity for social mobility for the poor.
“I do not foresee the return of subsidy when oil price rebounds. Just by removing subsidy in the 2020 budget, the nation is able to save over $400million.
“The savings would be better deployed to education or upgrade of the critical infrastructure in the country.”
Kyari said the NNPC has adopted a three-pronged approach to realise its target of zero refined fuel by 2024.
Through its ‘revamp, restructure and encourage’ approach, Kyari said the NNPC is determined to see that the country’s refineries are back to their nameplate capacities.
He explained that the NNPC is considering various options to revamp the refineries. He listed the options to include third party operational and maintenance model; long-term lease or a joint venture model similar to the structure obtainable today at the Nigeria LNG.