Osinbajo: Removing fuel subsidy helped us offset a burden of N15bn/month

Vice-President Yemi Osinbajo says the fuel subsidy removal has offset a burden of not less than N15.4 billion monthly from the federal government.

Osinbajo said this in Abuja on Thursday at the 2016 presentation of scorecard of the ministry of petroleum resources and agreements signing ceremony for Joint Venture Cash Calls (JVC) exit.

Represented by Abubakar Malami, attorney-general of the federation and minister of justice, Osinbajo said that $15 billion would be injected into the sector.

“I am pleased to be the special guest of honour at the agreements signing ceremony for Joint Venture Cash Call exit and the announcement of $15 billion investments to be done in the sector,” he said.

“The oil and gas sector remains very critical to the stability and growth of our economy as it accounts for about 90 per cent of earnings.

“Amongst others, the downstream sector has been deregulated with the elimination of petroleum subsidy. This policy has removed from government, a burden of not less than N15.4 billion monthly.”

He said government had taken steps to raise the domestic refining capacity for petroleum products by repairing the existing refineries.

“We have also licensed modular refineries and support the development of private refineries one of which is a 650,000 barrel per day capacity.”

According to Osinbajo, one of the refineries is nearing completion, and when completed it will “restore our pipeline to facilitate crude and products transportation”.

He said that the Federal Executive Council (FEC) had approved new measures aimed at eliminating the burden of JVC and easing future payments in the upstream sector.

Ibe Kachikwu, minister of state for petroleum, who also spoke at the event, said when he took over the leadership of the ministry, the oil sector was losing N1.2 trillion every year and fuel scarcity was common.

”Today, we have a situation where refined petroleum consumption has gone down from an all-time high of 40 million litres a day to about 28 million litres a day,” he said.

“On cash call, the issue was how long the upstream was going to continue to bleed as investments were drying up and activities grinding to a halt.

“For the first time in 2017, you are going to see the Ministry driving an effort with the Department of Petroleum Resources to find leakage areas, essential to cover the gap in the 2017 budget.

“In the Niger Delta, we have brought the all-time low production of 1.3 million barrels per day (mbpd) to 1.8mbpd but for some minor incidents it would be closer to 2.1mbpd or 2.2mbpd.

“We set a zero militancy target in 2017 and we want anything that needs to be done should be done.”