May 26, 2024

  No end in sight to nationwide fuel scarcity, as NNPCL, NMDPRA fail to address core supply issues

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Oredola Adeola

… as ex-depot price of petrol hits N215 per litre

The persistent fuel scarcity that has practically become a permanent feature in the country, is taking longer than expected as the situation has worsened in Lagos, Ogun, Port Harcourt, Abuja, and other parts of the country.This is happening after the Nigerian National Petroleum Company Limited, NNPCL and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) have in different statements promised adequate product sufficiency, with a commitment to ensuring that marketers load products from strategic depots to retail outlets nationwide.

EnergyDay’s investigation during the weekend showed that the statements of the Authority and the national oil company have done little to assuage the difficult supply issues responsible for the hike in the price of petrol.
The situation in Lagos over the weekend remained the same, as filling stations owned by major marketers including  Total Energies, Conoil, NIPCO, AITEO, and Mobil (11 PLC) recorded long queues, as they sell petrol for N170 per litre.
 The independent marketers sell for N260 per litre, claiming that they pick the products from the terminals and depots owned by  Total Energies, Conoil, NIPCO, AITEO, and Mobil (11 PLC) at an average of N215 per litre.
 Meanwhile, most of the filling stations in Ogun state sell at N300 and above, equally blaming supply issues as a major cause of the price hike.
Our correspondent who monitored the situation in Ogun state noted that filling stations in Owode, Atan and Idiroko areas of the state sell to motorists and residents between N300 and N350 per litre.The products are sold at N300 and N400 in Ifo, Abeokuta and other parts of Ogun states.

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.

Filling stations in other areas including Oke-Ogun and Oyo towns, dispense a litre to motorists and residents for N270 per litre.
Our correspondent who monitored the situation in Osogbo, Osun state, reported that some filling stations sell at ₦300 per litre, as motorists and residents spend hours in queue.
The situation was also the same in Ipetumodu, Ife and Modakeke areas of the state, as some filling stations were shut, while others sell between N300 and N350 per litre.
The scarcity in Abuja has remained the same for over seven (7) months, as NNPCL retail outlets and other major marketers sell between N168 and N180 per litre, while independent marketers sell between N200 to N250 per litre, especially in suburban communities of the FCT.
THE CAUSE OF SCARCITY ACCORDING TO MARKETERS
Recall that the Major Oil Marketers Association of Nigeria (MOMAN) had in a recent statement, attributed the high exchange rate as the major reason for the hike in the price of petrol at depots.
Executive Secretary of MOMAN, Mr Clement Isong in the statement said, “Due to unavailability of foreign exchange, we have been finding it so difficult to get forex from the Central Bank of Nigeria (CBN).  The exchange rate is extremely high at the parallel market. “
IPMAN

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.”

Mr Joseph Oyewale-Akanni, Vice-Chairman of the Independent Petroleum Marketers Association of Nigeria, IPMAN, Western Zone, in a recent statement attributed the current fuel scarcity and increase in the pump price to the hike in private depot prices.

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.

 

“When we factor in the cost of transportation to different parts of the country, we are forced to sell between N250 and N260 in the South West depending on locations.
NMDPRA

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.

 

“Consequently, marketers and the general public are advised to avoid panic buying, diversion of products and hoarding.
“The Authority assures the public that it would continue to monitor the supply and distribution of petroleum products nationwide, especially during this holiday season,” he said.NNPCL

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.

EXPERT’S VIEWS

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.

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