Business Step down as minister now, ex-commonwealth chair to Kachiku

– Ibe Kachiku, the junior minister for petroleum is already overwhelmed by his double position, Dr Adamu says – Dr Adamu said the current shortages of petrol and its erratic price is partly contributed by exploitation of the suppliers, who would rather maximise their profit at the expense of the poor

Nigeria’s minister of state for petroleum, Mr Ibe Kachiku has been advised to step down from the position and face his job as the managing director of the Nigerian National Petroleum Corporation (NNPC). Recall that Nigeria is currently battling extreme shortage of premium motor spirit (PMS) popularly known as petrol. Admonishing Kachiku to step down due to the complex nature of the NNPC, Dr Ahmed Adamu, a petroleum economist and pioneer global chairperson of Commonwealth Youth Council in chat with our reporter said the junior minister is already overwhelmed by his double position.

“Mr Kachiku (the junior minister for Petroleum) who doubled as the Managing Director (MD) of the Complex Nigerian National Petroleum Corporation (NNPC) and who handles most of the Petroleum Ministry leadership roles is already overwhelmed with so many pressing issues in the Petroleum Sector. “To make things easy for managing the Petroleum Sector, Nigeria needs a separate MD of NNPC, separate Ministers (Junior and Senior) for Petroleum. Mr. Kachiku should retain his earlier portfolio as MD of NNPC only, and some young competent Nigerians who are very familiar with the current global and local petroleum sector shall be appointed as Ministers for Petroleum,” he added. He questioned the sharp double price of petrol per litre as against government’s official price of 86.50 per litre.

There is apparent disregard to regulation in the Petroleum Sector. If the Price of Petrol is pegged at N86.5 per litre, why is it sold at N188 per litre? Initially, the price was regulated at N97 per litre, but due to the drop in the crude oil price, the landing cost of the litre of petrol also reduced, which motivated the downward review of the price to N86.5. “This was to allow the major marketers to make marginal profit. And since the price of crude oil has increased, there is need for the upward review of the regulated price, since there is no funding for subsidy. This will discourage the suppliers from unnecessary exploitations in the name of cost recovery. Therefore, there must be strict adherence to the adjustable and viable price of petrol across the country, and the regulated price shall be benchmarked with the most expensive crude oil market price.

As at last ten days, the landing cost of petrol per litre was N71.49, and the retailer’s margins was just N5/litre, and that of a dealer is just N1.95/litre. Now, one wonders what is the landing cost of the litre that was sold at N188? This shows apparent exploitations and profit maximization.” Dr Adamu said the current shortages of petrol and its erratic price is partly contributed by exploitation of the suppliers, who would rather maximise their profit at the expense of the poor. He said government has its limitation and the citizens have their own leadership roles adding that most of the major marketers now import petrol and sell at a price of their choice to maximise profit, and this profit maximization motives is transferred down to the retailers.

“People would have to accept any price, as Petrol has inelastic demand and it is a necessary commodity. Even though, some of the local marketers cannot access sufficient hard currency in the money market, and they still have to pay more Naira to acquire single unit of foreign currency, and this reduces their capacity to import. Nevertheless, if the marketers adhere to the regulated margins, the price of petrol won’t have reach this level high,” he told our reporter.

Adamu stressed that although the NNPC may not have sufficient storage and distribution capacity to meet the country’s demand, marketers must be encouraged to be selfless and patriotic and adhere to the maximum regulated profit margin, he charged. “They should not quantify their profit based on the money that go into their pockets, but how many lives they put at ease, how many businesses they put back, how many lives they saves, and how fast they make the economy grow.” He urged the Buhari led government to build a new refinery- which he says will cost about N800 billion to end the suffering of millions of Nigeria.