Follow Us on Google
By Adewale Sanyaolu
The re-emergency of fuel queues across major parts of the country came to Nigerians as a rude shock despite several assurances from the importer of last resort – the Nigerian National Petroleum Company(NNPC) Limited – that it has enough stock to last for 60 days.
The claim by the NNPC, however, contradicts the reality on ground as most depots in Apapa, Satellite town, Lagos and other parts of the country claimed that they have insufficient fuel supply.
The Major Oil Marketers Association of Nigeria (MOMAN) recently argued that the import volume by the NNPC has dropped by 68 per cent in the last three months, a development that has compounded the fuel scarcity situation.
MOMAN Chairman, Mr Olumide Adeosun, disclosed that there has been a steady drop in the supply of petrol from the Petroleum Products Marketing Company (PPMC), a subsidiary of the NNPC Limited over the last three months.
Giving a breakdown of the slide in fuel supply figures into the domestic market, Adeosun said that 438,000 metric tons were injected in April, N213,100 metric tons in May and 140,000 metric tons as at June 20, 2022.
He explained that the consistent drop in supply over the three month period has contributed in no small measure to the current supply and distribution shortfall.
Adeosun added that the current scarcity of petrol is further compounded by distribution challenges created by the unavailability and continuous surge in international prices of Automotive Gas Oil (Diesel)
MOMAN members, he said, are working with the authority, NNPC/PPMC, NARTO and other industry stakeholders to make the product (petrol) available at the pumps and eliminate the queues as quickly as possible.
He warned that MOMAN, as an association, fears that the current supply framework cannot guarantee steady and consistent supplies to the country given the current state of government finances and unpredictable international supply shortages.
‘’We, therefore, recommend a gradual price deregulation with targeted palliatives (e.g. transport and agricultural subsidies) to the public to ease implementation,” he said.
In the interim, the association is recommending that the current single supplier strategy be reviewed, while the Federal Ministry of Petroleum Resources, in collaboration with the Ministry of Finance and relevant MDAs, should set up a taskforce to immediately focus on increasing diesel supply through accelerated initiatives to increase local modular refining capacity.
This move, it believes, would tackle the supply and distribution challenges.
It also advocated a phased rehabilitation of existing NNPC refineries to hasten supply of middle distillates (AGO & ATK).
‘‘MOMAN recognises and closely associates with the need to ease challenges with respect to high energy and transportation costs occasioned by extraneous circumstances.
“MOMAN shall continually do its best to distribute petrol to its customers across the country and keep exploring opportunities to partner with other industry stakeholders,’’ he said.
While the Federal Government claimed that petroleum marketers were in profiteering, marketers on the other hand, especially the Depot and Petroleum Products Marketers’ Association of Nigeria (DAPPMAN) said the current economic realities which have impacted on their running cost was negatively impacting their operations.
On the other hand, members of the Independent Petroleum Marketers Association of Nigeria (IPMAN) alleged that DAPPMAN members running private depots were profiteering because they were not selling petrol at the approved ex-depot price of N148 per litre.
They lamented that the high cost of Automotive Gas Oil (AGO) popularly called diesel which is used to petrol tankers have gone up by over 80 per cent from N250 per litre to N800 per litre, saying that with all these additional costs, it was practically impossible for them to sell at the approved retail price of N165 per litre.
IPMAN, however, called on the management of NNPC to investigate the activities of private depots owned by DAPPMAN over their role in the ongoing fuel scarcity.
National President of IPMAN, Debo Ahmed and National Publicity Secretary, Chinedu Ukadike, in a statement made available to Sunday Sun expressed concerns over the sale of petroleum products to members of IPMAN above the NNPC approved template of N148.00 which was inimical to the survival of the industry.
“The government is doing nothing about the private depots that are violating the system by selling higher. IPMAN members had suffered a lot in the hands of private depot owners. We appreciate the efforts of NNPC to make product available, but we have really suffered a lot of setback based on the cost of diesel. We aren’t saying there is non-availability of petroleum products, but what is available isn’t sufficient . The cost of diesel has also increased.
“These two factors have led to profiteering at tank farms, whereby marketers buy petroleum products at the rate of N169. 00, to N170.00 above government controlled pump price. “This non-availability has led to profiteering in the hands of Products Depots Operations along the coastal areas. We are also finding it difficult to move products from Lagos-Kano-Kaduna since we are heavily dependent on PDOs since they are located along the coastal areas. So, after looking at all these factors, it costs close to N700,000 to move petroleum products from Lagos to Kano since we are at the mercy of the PDOs.
“It is becoming increasingly difficult for marketers to sell petroleum products with this little margin. It is easy for marketers to move products from NNPCL depots to sell at N165.00 but since we aren’t getting at N148.00, which is the government template for private depot tank farm owners to sell to marketers, but we are getting at N160.00, there is no way a marketer will use N5.00 to sell petroleum products. It isn’t viable, considering the cost of maintenance of the filling station and also cost of fund. A litre of Automotive Gas Oil (diesel) is very huge and we are borrowing these funds from commercial banks. We want to use this opportunity to tell NNPC on behalf of marketers to ensure that we have sufficient products,” he said.
However, the National Operations Controller of IPMAN, Mr Mike Osatuyi, said that the way out of the re-occurring fuel scarcity was for the downstream to be fully deregulated.
Osatuyi, warned the Federal Government against the continued payment of subsidy, saying that the model was no longer sustainable.
Speaking in a live interview on a national TV, Osatuyi said that at the current rate of about $123 per barrel of oil subsidy will rise to N6 trillion by end of 2022.
‘’As at the beginning of 2022, the budget for fuel subsidy was N4 trillion. But with the rising oil prices occasioned by the Russia-Ukraine crisis, the figure will swell to N6 trillion.
“Our plea is that government should urgently convene a meeting of all stakeholders in the value chain order to find a lasting solution to this problem’’.
On its part, DAPPMAN said that it empathises with customers and the teeming Nigerian public on the current distribution hiccups in the supply of Premium Motor Spirit (petrol) from the various petrol stations dispensing at N165 per litre.
‘‘Nigerians would recall that the ongoing Russian/Ukraine war has adversely affected the whole world, including our country Nigeria, impacting negatively on global and local fuel and food supply, as the international prices of these items have risen astronomically and have more than doubled their old rates since the beginning of the war, thereby causing extreme increases in local prices.
“By extension, the local running costs of operating our various fuel depots have gone up astronomically. The petrol we supply is sourced solely from NNPC Limited’s marketing subsidiary, Petroleum Products Marketing Company Limited (PPMC) for sale to the public at the regulated price of N165 per litre.
“This purchase is made by depot operators with funds sourced with high bank interest charges, alongside increased costs of hiring vessels, with which we deliver the fuel cargoes to our depots. These costs have doubled within the period of this Russian/Ukraine war.
“Added to this is the scarcity of bunkers (ship’s fuel). We also experienced astronomical increases in the cost of diesel used to power equipment and machinery in our various depots and our retail outlets. Depot owners and the government have continued to struggle over time to sustain supply of PMS at the current pump price of N165 per litre despite the huge subsidy cost to government and abysmal margins to the depot owners.
“But for its suspension, the implementation of the Petroleum Industry Act 2021 would have provided an ideal enabling environment by creating the free market in which demand and supply would affect fuel pump price. We hereby assure the public that depot owners, working in concert with NNPC Limited, through its marketing subsidiary, will continue to work hard to ensure availability of products nationwide,’’ he promised.
But, Mr Ugbugo Ukoha, executive director, Distribution Systems, Storage and Retail Infrastructure, Nigeria Midstream Downstream Petroleum Regulatory Authority(NMDPRA), maintained that petrol was a regulated product and urged marketers to comply with the pricing template.
Ukoha posited that the conflict between Russia and Ukraine had led to an increment in the cost of Automotive Gas Oil (diesel), which was a critical product used in transporting petroleum products from the depots to the retail outlets.
He said: “So, when we observed that this poses a big challenge in the movement of other products, we made the representation to the Minister of State for Petroleum and Mr President graciously approved that the freight rate for trucks be increased.
“There’s a N10 addition which we will apply to the different routes to enable trucks to move to docks easily with less burden.
“With these kinds of efforts from government, we can only continue to appeal to operators within this industry to play by the rules.
“PMS is a regulated product and the prices are fixed. The ex-depot price is known. The pump price remains N165 and the authority is ever ready to enforce those rules.So, we will continue to urge Nigerians to keep within these operating rules,“ he advised.
Ukoha said that the focus of the stakeholders in the next few days would be to close the supply gaps and resolve the ongoing scarcity of petrol as soon as possible.
