MetroBusinessNews

Fuel Price: Odd World As Abnormal Becomes ‘New Normal’, FG, Marketers, Consumers At Crossroads

 

 
John Omachonu
For most Nigerians, these are trying times either in terms of prices of goods, particularly, food items, Petroleum products or security.
However, despite the position of some oil marketers that the current pump price of N165 per litre, for petrol in the country was unsustainable following long queues that have surfaced in some cities across the country, Federal Government’s Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) yesterday maintained that the pump price for premium motor spirit (PMS) remains at the regulated price of N165 per litre.
Also, Tuesday, the nation’s oil company, National Petroleum Corporation (NNPC) assured Nigerians that it has over two billion litres of PMS that would last for the next 34 days in the country, adding that there was enough stock to meet the nation’s demand.
But, consumers are buying the fuel between N180 and N200 in some parts of Lagos, Ogun and many other states as fuel scarcity bites harder, creating traffic gridlock and crippling business activities.
Transporters have increased their fares, all in the guise to beat the high cost of the product, whose price has become a matter of conjectures and locations.
However, oil marketers under the aegis of Depot and Petroleum Products Marketers’ Association of Nigeria (DAPPMAN) have empathised with their customers and the members of the public on the current distribution hiccups witnessed in the supply of the product from the various petrol stations dispensing at N165 per litre, saying the price was unsustainable.
Interestingly, the Federal Government Insists that subsidy payments must stay despite the public outcry, not necessarily on the desirability or otherwise of it, but the fact that it seems not serving the interest of the ‘common man’ as government envisages.
In the recent interview by Bloomberg on why Nigeria still retains the fuel subdidy, President Muhammadu Buhari said,:
“Most western countries are today implementing fuel subsidies. Why would we remove ours now? What is good for the goose is good for the gander!

What our western allies are learning the hard way is what looks good on paper and the human consequences are two different things.

My government set in motion plans to remove the subsidy late last year. After further consultation with stakeholders, and as events unfolded this year, such a move became increasingly untenable.

Boosting internal production for refined products shall also help.

Capacity is due to step up markedly later this year and next, as private players and modular refineries (Dangote Refinery, BUA Group Refinery, Waltersmith Refinery) come on board.“

But, how long can Nigerians endure these challenges as impoverishment continues has become a major debate in most gatherings and at different fora.

The House of Representatives has summoned stakeholders in the downstream oil and gas sector to appear before it today over the resurgence of petrol scarcity and queues in some parts of the country as well as the soaring prices of diesel and Liquefied Petroleum Gas (LPG).

So if the Federal Government Insists it has enough stock to be sold at N165/litre, marketers say the price is unsustainable and consumers are paying the ‘differenyials’ either directly or through hike in transport fares, when will the later get to the junction of relief so as to get these products at ‘affordable’ prices?
At Total and Mobil fueling stations around Afromedia and Okokomaiko axis of Lagos, a litre of fuel was sold for between N185 to N200 in adherence to the directives by the Independent Petroleum Marketers Association of Nigeria (IPMAN) that removed the cap on the N165 per litre petrol price.
At the Fadeyi area along Ikorodu road, fuel still sells at N165/ltr to motorists who were seen in a long queue and tried to outwit one another for a limited supply of the product.
In the area, only one of the four fueling stations sells to everyone while another sells only to touts who in turn, sell in Jerry cans to the needy while the other two stations are closed to business.
In Shomolu, fueling stations closed at noon Monday and only a few reopened around 4 pm and closed not long after again.
At NIPCO fueling station at Arepo, Ogun state, as at Wednesday, it was sold for N169 per litre.
On Tuesday, they sold the product from morning till around 5pm, when they told motorists abruptly that the product had finished.
Some other fueling stations along the Lagos-Ibadan expressway sold for N200/litre for very short period of Tuesday.
The scarcity allows a brisk business to the commercial motorcyclists within the Arepo, Mowe axis, but with additional cost.
According to some of the operators, they had to increase the fares because of additional N100 they pay to the station attendants.
As at noon on Wednesday, most filling stations at some parts of Lagos and Ogun have closed.
At the station beside the Redemption Camp main gate, it was observed that motorists had to tip the fuel attendants with N200 before they could get to buy.
At another filling station at Magboro in Ogun state, although the pump price on the metre was still at N165, it was being sold for N200 per litre, through the use of calculators.
But most motorists express anger with government over the incessant suffering and hardship, querying the continued justification of paying subsidy for product that are neither always available nor does the government actually know the quantity being consumed daily.
At a motor park beside the Redemption Camp main gate, where commuters board vehicles to Sagamu, Ibadan and Benin, Onitsha and other destinations, the transportation fare to Ibadan which was formerly below N500 is now over N1,000, while to Sagamu has increased from N200 to N300.
But contrary to Government’s position that the problem is not from the supply side, it was gathered that NNPC may not have enough product and hence failed to supply adequately.
According to IPMAN, its members can no longer sell premium motor spirit (PMS) at the regulated price due to a hostile business environment.
Speaking at a media briefing, Akin Akinrinade, chairman, of Lagos satellite depot, stated that its members can no longer dispense petrol at filling stations below N180 per litre.
“Our members can no longer sell at N165. There is no reasonable businessman in this business that can sell below N180 per litre,” Akinrinade said.
“We are not on strike rather the business environment has been very hostile to us such that we can no longer do business under this condition.
“For you to load a litre of petrol, you will pay N162 per litre. You will have to add the cost of transportation which is between N6 to N8, depending on the distance within Lagos.
If it is outside Lagos, it is much more than that.
“So, If you add N8 to N162, you already have N170 and this product is regulated by the government and the government wants us to sell at N165.
 We have not added the charges at the depots and the running cost at our stations.”
“You know what diesel sells now, and you know how epileptic power supply is, we run on generators using diesel at N800 per litre,” he said.
“There is no station in Lagos or anywhere that uses less than 50 litres per day.”
Despite the scarcity and insistence by IPMAN that selling at a capped price of N165 per litre is not feasible under the current situation, the federal government says the fixed pump price of Premium Motor Spirit (PMS) remains at N165 per litre as stipulated in the petroleum product pricing template.

The government also advised Nigerians against panic buying of the product, saying that the country currently has over two billion litres of PMS in various depots according to the trio of Nigerian Midstream and Downstream Petroleum Regulatory Authority, the Nigerian National Petroleum Company Ltd., and the Pipelines and Product Marketing Company after visiting jetties in Apapa, Lagos, on Tuesday.

The oil marketers had said the price increase was necessitated by the increment in the ex-depot price of PMS by some private depots which they were buying the product from.

However, Ugbugo Ukoha, Executive Director, Distribution Systems, Storage and Retail Infrastructure, NMDPRA, maintained that petrol was a regulated product and urged marketers to comply with the pricing template.

Ukoha said 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 is 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 the 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.”

Ukoha said 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.
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Also, Adetunji Adeyemi, Group Executive Director, Downstream, NNPC Ltd., said the purpose of the visit to the depots was to get first-hand information on the challenges responsible for the current scarcity.

Adeyemi said despite the challenges globally in terms of the supply chain, NNPC had continued to provide petroleum products, specifically PMS to Nigerians.

“Today we have about 2 billion litres of PMS in-country, which is about 34 days sufficiency. So, there is sufficient petrol in the country.

“We are working with the entire stakeholders and players in the downstream sector to ensure that this product gets to the distribution channels and also the stations.

“We want Nigerians to continue to enjoy the free flow of petroleum products,” he said.

Isiyaku Abdullahi, Managing Director, PPMC, said the company had been supporting transporters and marketers with diesel in form of palliative to ensure the smooth distribution of PMS and ameliorate the suffering of Nigerians.

Abdullahi said three vessels carrying about 60 metric tons of PMS were currently discharging at the Apapa jetty, which would be further transported to Lagos and other parts of the country to restore normalcy.

But the lives of many Nigerians seem regulated just like the product as claimed by the government.
But it’s the benefits of this regulation that are still eluding most Nigerians.
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