Former Governor of Central Bank of Nigeria (CBN), Sanusi Lamido, has joined Kaduna State Governor, Nasir El-Rufai, to demand for the scraping of Nigerian National Petroleum Company Limited (NNPC).
Sanusi made the call over the weekend while saying that NNPC Limited should be disbanded, because it has become a money pit rather than the cash cow it was established to be.
Explaining that the oil business regulatory firm is fast transforming into a problem, with oil revenue being in secular decline for over a decade, Sanusi spoke in similar light with El-Rufai who described NNPC Limited as a failure.
“NNPC is a money pit instead of a cash cow; it should be unbundled and disbanded. More can be had from simply levying royalties and CIT on private players following models like Petronas and Petrobras. Beyond the challenging global context, Nigeria has problems entirely of its own making where oil revenues which were once the lifeblood of the Federal Government, have been in secular decline for over a decade.
This has been happening regardless of the oil price environment. In some ways, Nigeria’s problems are not a failure of the system because it is working as one would expect, but a loss of design and a failure of implementation. “In the current environment, the first and most obvious problem is the existence of the fuel subsidy and opportunities this creates for fraud, the average daily fuel consumption in Nigeria (by the NNPC’s admission) is 66 million litres per day, and on some days as high as 100 million litres per day. This is roughly equivalent to where Indonesia (2019), a country with nearly three times Nigeria’s GDP per capita, two times the number of vehicles and 2.5 times the size of the road network. A different way to benchmark Nigeria’s consumption is to look at PMS consumed by each vehicle on a daily basis, on this metric, Nigeria even outranks Iran, a country with three to four times its level of wealth and a road network that is three times the size on a per capita basis and this is not just the impact of subsidies because in Iran official fuel price are 5 US cents per litre, less than 15 per cent of the pump price in Nigeria,” he said.