Allocation of forex at official rate to marketers will enhance petroleum products supply  across Nigeria- Akpani, DAPPMAN Chairman

Oredola Adeola

The Depots, and Petroleum Products Marketers Association of Nigeria (DAPPMAN), has revealed that marketers need allocation of foreign exchange at the official rate from the Central Bank of Nigeria(CBN) in order to enhance the supply and distribution of Premium Motor Spirit (PMS), also known as petrol, and other petroleum products across Nigeria.

Mrs. Winifred Akpani, DAPPMAN’s Chairman, made this known during a press conference held in Lagos on Tuesday.

According to her, access to foreign exchange has been a major challenge to marketers. She, therefore, called on the Nigerian Government to provide petroleum marketers in the country access to obtain US dollars at the Central Bank of Nigeria (CBN) official rate.

The DAPPMAN spokesperson noted that it is worrisome for product marketers to be sourcing for Forex through the parallel market for transactions within Nigeria.

Explaining how the US$  is used to facilitate transactions within the downstream sector in Nigeria, Akpani disclosed that marketers’ core operational expenses are denominated in dollars.

She alleged that some unauthorised fees and levies are paid to agencies within Nigeria in dollars.

Akpani said, “For example, to charter a vessel to convey 20,000 MT of petrol within Nigeria for 10 days, freight charges are denominated in dollars, that comes to about N220 million at an official forex rate of N440.

“And a whooping N440 million for petroleum marketers who have to source forex from the parallel market at N880.

“This implies an additional cost of N11 per litre for this transaction due to the forex official and parallel market differential.

“ Jetty fees are also charged in dollars. This is usually N15.4 million at official forex rates, but we often pay N30.8 million for petroleum marketers at the rate offered to us at the parallel market.

“In addition, Jetty Berth is charged in dollars and comes to N2.2m at the official forex rate and N4.4 million at the parallel market rate.

“While port dues, charged in dollars by the Nigerian Ports Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA), come to N71.51 million at the official forex rate and N142.796 million for marketers who source forex from the parallel market.

“DAPPMAN hereby calls on the government to establish a level playing field in the sector by giving petroleum marketers access to forex at the CBN exchange rate for their operations,” she said.

She further said, “Accessing dollars for our operations has been an insurmountable hurdle for petroleum marketers.

“The difference between CBN exchange rate and the parallel market exchange rate continues to get wider by the day.

Akpani said accessing forex through the CBN window would enhance capacity and facilitate a seamless supply of petrol and birth a regime of sustainability in terms of storage, distribution, and supply across the nation.

Lamenting about the new challenges that  Nigerian National Petroleum Company Limited (NNPCL) has introduced to the downstream sub-sector, the DAPPMAN boss said that the national oil company which is the traditional supplier of products has access to forex at official rates.

She noted that with NNPCL’s acquisition of OVH/Oando’s retail, the national oil company has full access to dollars at CBN’s official rates. This, according to her, places NNPCL in a more favourable position over other downstream players.

Akpani, therefore, condemned the absence of a level-playing field that guarantees access to dollars for all marketers at official rates.

She noted the idea of NNPCL as the sole importer of petrol in Nigeria, is no longer sustainable, due to the size of the market.

The DAPPMAN boss, therefore, insisted that the Nigerian Government must urgently make strategic decisions to ensure that Nigeria takes full advantage of the growing demand for petroleum products across Africa.

She said, “For us in Nigeria, this will include full deregulation of the sector and a deliberate strategy geared towards creating an enabling environment for all petroleum marketers to add value, alongside the NNPC.

Akpani said DAPPMAN considered the government’s plan to remove subsidies in 2023 as the right decision that would reposition the sector for sustainable growth and development.

She said the removal of subsidies would free up funds to shore up the capacity needed to transform the health, education, defence, and transportation sectors among others.

“As we approach the Yuletide and transition to the election year in 2023, the nation needs the full involvement of all operators to shore up capacity and ensure product availability at excellent service levels.

“While there might be fears regarding possible scarcity of petrol, DAPPMAN assures Nigerians of its ability and willingness to work assiduously to ramp up supply as the government addresses the challenges of forex availability in the sector,” she said.

The DAPPMAN boss lauded the Federal Government and the Nigerian Midstream and Downstream Regulatory Authority for emerging gains in the sector, especially, following the introduction of the Petroleum Industry Act.

“There have been important meetings aimed at shaping a sustainable future for the sector.

“These must continue as the success of the sector in the face of the intervening global energy crisis depends on collaboration and consideration of how operators can shore up capacity on the wings of market-friendly policies and a level-playing field,” the DAPPMAN Chairman revealed.