NNPC absorbing actual costs of petroleum products, says Tonye Cole

Tonye Cole, co-founder of Sahara Group, says the Nigerian National Petroleum Company (NNPC) Limited is under a lot of pressure over the burden of petrol subsidy payments and product importation.

Cole spoke on Monday in an interview with Channels Television.

On August 19, TheCable had reported that President Bola Tinubu approved a request by the NNPC to utilise the 2023 final dividends due the federation to pay for petrol subsidy.

The national oil firm denied the existence of the subsidy, but later said it is being owed N7.8 trillion by the federal government for petrol subsidy.

Responding to questions on the recent debate about whether the federal government is paying petrol subsidy or not, the businessman said the Nigerian oil cartel is absorbing the actual costs of petroleum products.

“So, first and foremost, NNPC carries a huge burden when it comes to the issue of making sure that you have petroleum products out there for the masses,” Cole said.

“And as we speak, because there has been what you would call NNPC absorbing most of the true costs of petroleum products, you’ve already had so many discussions on whether there is subsidy or not. So a lot of the earnings of NNPC is already going into that.

“And that, in essence, begins to affect other things. It will affect your cash flows. It will affect the ability of NNPC to do what it really needs to do, which is to be a producer, to be a developmental company, and so on and so forth.

“So, NNPC is under a lot of pressure and that pressure can be directly traced to the issue of importation of petroleum products and what you would call subsidy or no subsidy.”

Speaking on solutions to ensure consistent petrol supply and eradicate scarcity and long queues, Cole said there is a need to shift focus from just the oil and gas sector.

“First and foremost, I believe that the only way that you can begin to address the oil and gas sector is for you to put the pressure off the oil and gas sector. And it sounds like a paradox,” he said.

“Why there is so much difficulty is because the oil and gas sector continues to bear so much of the burden that Nigeria brings upon it.

“And so the only way that you can resolve it and the only way that you can stop all of the problems is that you must begin to address monetary policies in other sectors that will put less pressure on the foreign exchange and Naira.”

Cole said in terms of pricing, NNPC is the only “institution today that can absorb the cost for the Nigerian people, as you see it at 600 or 700 naira at the pump price, is NNPC bringing it and giving it cheaper”.

The oil and gas expert said other oil market players, such as the Independent Petroleum Marketers Association of Nigeria (IPMAN) will have to go through NNPC, adding that the oil firm is “the only way and the only game in town”.