Wednesday, March 30, 2016

Fuel Scarcity Will End In 9 days - Dr. Kachikwu

The Minister of State for Petroleum, Dr. Ibe Kachikwu, appeared before the Senate Committee on Petroleum Resources (Downstream) on Tuesday to give reasons for the acute fuel scarcity across the country and the efforts being made by his ministry to resolve the embarrassing situation.

He regretted the situation and apologised to Nigerians, who he said were really going through difficult moments, and promised that the scarcity would end on or before April 7.

Kachikwu said he would not resign from his position as minister and instead asked those who were threatening to stage a protest in Abuja to save their money because he took the appointment to work for his fatherland.

Kachikwu said, "Let me put the reasons for the scarcity in three categories. First, when we came in August, this country had arrears of unpaid subsidy claims that were in excess of N600bn, which were not paid for over a year.

"Progressively, over a period of eight months, prior to my coming on board, people had been staying away from importation not at a heavy level, but by about 10 to 15 per cent of allocations were not being met.

"There was hope that ultimately, if the subsidy regime continued, they would get paid; so, some people continued to import, but by the time we came in, people had reached a breaking point and most of the companies didn't have the liquidity even to go to the banks and open letters of credit, and that became a major issue."

He said it was obvious that having cleared the N600bn subsidy claims, the country could no longer continue with the subsidy regime owing to dwindling oil revenue and the fact that monumental frauds were being uncovered in the system.

As of January 1 this year, the minister stated that the country was no longer paying subsidy, saving a cumulative amount of over N1tn in a one year period.

Kachikwu noted, "The second major issue was that once the N600bn subsidy money was paid, the ability of the marketers to import the product became a challenge, because they could not raise letters of credit, and up to this point, that still remains a major issue.

"So, even if they wanted to import, they needed letters of credit and adequate foreign exchange cover. Some of them were owing arrears of liabilities as a result of the commitment I had made on petroleum importation."

As part of efforts to ensure a lasting solution to the problem, he stated that the nation was setting up for the first time strategic reserves of about two million tonnes to provide products always.

He said these would be operational as from May and would contain between five and seven cargos of fuel per reserve.

Kachikwu said, "Once we do that, we should be away from the incessant fuel crisis that we have.

We expect that between now and about the 6th to the 7th of April, the fuel queues will disappear, the DSDP will begin and the foreign exchange allocation will see us smoothly through the track.

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