The situation was the same in Oyo State, as most filling stations in major parts of Ibadan the capital city were shut, while others sell between N250 and N300 per litre, with the exception of all BOVAS filling stations that dispense the product to motorists and residents at N180 per litre, recording lengthy queues.
Chief Ukadike Chinedu, National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, IPMAN, said the dysfunctional nature of the NNPC depots had made private depots raise the cost of PMS stored in their facilities.
He said some private depots were selling the commodity at N210/litre, whereas the approved NNPC rate was N147/litre.
Ukadike, however, explained that the charges incurred by the private depots such as paying rent for vessels in dollars, among others, were factors that led to the hike in the cost of petrol at the depots.
“This is why we are pleading with the government to bring back the depots under the management of the NNPCL so that we can access the product at the approved rate,” he stated.
Speaking about how forex affects the supply of petrol from the port to the terminal, the IPMAN scribe said, “When the mother vessel comes into Lagos, the product(petrol) will be transferred into the daughter’s vessels onward to ports in Lagos, Warri, Port Harcourt, etc.
“These daughter’s vessels are hired by major marketers and other private tank farm owners including the private depot owners, who pay vessel charges in dollars sourced from the open market. The rate at which the forex is obtained goes further to determine the amount that petrol would be sold.
“Now, you cannot expect them to sell PMS at N145/litre when the price of hiring a vessel has risen from $38,000 to around $108,000 and $111,000, depending on the level of the vessel. These charges are paid in dollars.”
He said: “ the private depots are selling between N212 and N215 per litre being the ex-depot price, despite collecting the product at N113 per litre, directly from NNPCL. Instead of N178 per litre.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in a statement by Mr Kimchi Apollo, the Authority’s General Manager of Corporate Communications, said that the Nigerian National Petroleum Corporation Limited (NNPCL) had imported PMS with current stock levels sufficient for 34 days.
The NNPCL assured Nigerians, in its usual manner, the sufficiency of the product, leaving out the real issue of supply and forex denominated downstream sector.
Despite selling to marketers at between N113 per litre at the terminals, all the retail outlets of the national oil company sell to motorists at N168 per litre, with attendant queues across the country.
Professor of Petroleum Economics, in his reactions to the situation revealed that the Petroleum Industry Act 2021 calls for deregulation of the downstream sector. He insisted that there is no solution in sight until the downstream sector is completely deregulated in compliance with the PIA.
He said, “It is wrong for the Federal Government to cap the price of petrol. It is not in sync with PIA. You cannot find a country in West Africa selling petrol at less than a dollar per litre in the equivalency of local currency.
“Subsidy is like putting Nigeria’s economy on the back of a tiger. The economy will end up in the belly of the tiger.
“Although, it may the right to agree that removing subsidy is not palatable to political expediency, but subsidizing petroleum consumption is destructive and suicidal to the economy.
“Deregulation of the pricing mechanism is the key to creating the multiplier effects oil and gas can offer to the economy. A monopoly importer of PMS creates market inefficiency any day.
“The solution is for Nigeria to liberalise the PMS import market and let go of the dual forex market system.
These two markets are intertwined. Of course, these are tough choices to make in an election year, more so when the operators in these two markets are badly skewed,” the Professor Emeritus in Petroleum Economics and Policy Research at Louisiana State University, Center for Energy Studies, USA, said.
Professor Iledare however noted that PIA implementation can address the issues, with the removal of petrol subsidy.