Governors of the 36 states of the federation have declared the continued payment of subsidy on Premium Motor Spirit (PMS) also known as petrol by the Nigerian National Petroleum Corporation (NNPC) as no longer sustainable because it drains the country’s resources.

They, therefore, urged the federal government to immediately end the regime.

Through the chairman of the Nigeria Governors’ Forum (NGF) and governor of Ekiti State, Dr. Kayode Fayemi, the governors said that fuel subsidy remains a major drawback on government revenues and stressed the need for a new arrangement on how government would absorb the cost.

Fayemi spoke yesterday in Abuja when he led a delegation to visit the new NNPC’s group managing director (GMD), Mr. Mele Kyari, at the corporation’s headquarters.

The governor said: “It is important to highlight that subsidy remains a major drawback on government revenues. We may need to consider a new deal on how government will absorb the cost of subsidy.

“This has become necessary given the new reality of low oil revenues and rising government commitments. We believe that at the current course, subsidy costs will continue to offset any recovery in the oil market. The country recorded one of its lowest costs of subsidy in 2016 when oil traded at an average of $48.11 per barrel. Total subsidy that year was around N28.6 billion; but the amount rose to N219 billion in 2017 and N345.5 billion by mid-2018, as the price of oil and domestic PMS consumption rebounded. These are important considerations for us, with direct implications on energy security and economic stability in the country,” he said.

According to Fayemi, having worked with Kyari when he was minister of mines and steel, he believes that the new NNPC boss is a man of integrity who will deliver on his promises to the country

Last month, the Emir of Kano, Mallam Muhammad Sanusi II, had warned that Nigeria was on the verge of bankruptcy as fuel and electricity subsidies, as well as debt servicing, continue to eat into the government revenue.

Sanusi, a former governor of the Central Bank of Nigeria (CBN), in his address at the third National Treasury Workshop organised by the office of the Accountant-General of the Federation in Kano, advised President Muhammadu Buhari’s administration to scrap fuel and electricity tariff subsidies in order to stabilise the economy.

He had said: “In 2011, when I was CBN governor, Nigeria made $16billion from petroleum sales, and we spent $8billionn importing petroleum and spent another $8.2billion subsidising the product…and I asked, ‘Is this sustainable?”

Meanwhile, the NNPC has expressed its readiness to work with the NGF in order to grow crude oil production, renewable energy and generate more revenue for the country.

In a press release issued in Abuja yesterday by the corporation’s group general manager, Group Public Affairs Division, Mr. Ndu Ughamadu, the NNPC stated that Kyari made this commitment when Fayemi led the Governor of Sokoto State and NGF’s deputy chairman, Aminu Waziri Tambuwal, on a business visit to the NNPC Towers in Abuja.

Kyari said that the NNPC was ready to work for Nigerians through the efficient exploration and exploitation of the nation’s abundant hydrocarbon resources, noting that the NGF was an important and critical stakeholder to the successes of the corporation’s operations.

“It is our job to deliver value for the teeming population of this country. The NNPC has no excuse but to deliver on its mandate by touching the lives of Nigerians in many positive ways. We will ensure steady and unimpeded supply and distribution of petroleum products and we will also ensure that the NNPC remittances to the Federation Account Allocation Committee (FAAC) are enhanced,” Kyari said.

He said that NNPC’s operations would continue to drive the levers of production that would ensure steady generation of royalties and petroleum profit taxes from all its partners in the oil and gas value chain.

The NNPC’s helmsman stated that the corporation would work with the National Assembly and the NGF to ensure that appropriate legislations were put in place to guarantee a fiscal environment that would promote inflow of investment into the oil sector.

On transparency, Kyari promised that the finances and operations of the corporation would continue to be communicated to the NGF and that the NNPC would continue to engage the Forum to make the operations of the Oil and Gas Industry smooth in the country.

He said the NNPC would continue to work with the governors to enact appropriate legislations to mitigate incidences of pipeline vandalism, noting that adequate security of the corporation’s pipelines would go a long way to improving the nation’s revenue portfolio.

“We would promote partnership with the states in the area of renewable energy in line with our plan to transform into a competitive global integrated energy company,” Kyari said.

He added that the NNPC would continue to work with the Department of Petroleum Resources (DPR), the Federal Inland Revenue Services (FIRs) and all other revenue generating agencies of government to ensure fiscal feasibility for the states in consonance with the Medium Term Expenditure Framework (MTEF) enable good planning.

Fayemi congratulated Kyari on his well-deserved appointment describing him as a true emblem of transparency following his active participation and belief in the principles of the Extractive Industries Transparency Initiative (EITI).

Earlier Fayemi, assured Kyari of NGF’s support, stressing that they would continue to partner with the NNPC and its leadership to deliver value to Nigerians.

“As governors at the sub-national level, we would continue to safeguard the NNPC’s pipelines as they run through our various states. We would partner and support the security agencies to mitigate the frequent infractions on the facilities of the corporation across the states,” he said.