July 23, 2024

Petrol marketers lament over new ex-depot price, say new pump price unrealistic, as NNPCL releases new memo

 

Oredola Adeola

 

Marketers of petroleum products have revealed that it is unrealistic to sell Premium Motor Spirit (Petrol) at between N488 and N557 per litre, after paying almost N560/litre to lift the product from the depots to filling stations across the country.

 

 

This is coming on the sideline of the recent memo released by the Nigerian National Petroleum Company (NNPC) Limited to the marketers directing them to adjust their old orders in line with the new price template.

 

EnergyDay gathered that the NNPCL at the weekend released a memo asking the marketers to merge their old orders which carried the old price of about N7.5m per 33,000 litres of petrol at N171/litre ex-depot, to around N23 million or N45 million litres for two trucks.

 

 

This, therefore, means that the marketers would have to add almost N14 million and more to the amount they had already paid during the pre-subsidy removal regime, before they can lift 33,000 litres of petrol.

 

 

The NNPCL in the directive, stated that marketers who had preordered three trucks at N7.5m each before the removal of subsidy and the take-off of the new price regime are expected to either merge their orders or get a refund.

 

 

The circular reads, “Following the full deregulation of PMS, NNPC Retail has made the following options available to help customers manage the impact of the additional cash flow requirement.

 

 

“Marketers now have the option of consolidating pre-paid self-owned tickets for fresh tickets in line with the revised price. Interested marketers can engage their respective NRL Depot representatives for guidance on how to initiate this option.

 

 

“Also, there is an option for a cash refund. Marketers who are interested in initiating this option should send in an official request addressed to the MD NNPC Retail. The request should include evidence of payment and order details (RRR number, Sales quotation number and Meter ticket number).

 

 

“Upon receipt of the official request together with the above-supporting documents, your refund request will be made processed,” the circular ended.

 

 

Mike Osatuyi, National Operations Controller of the Independent Petroleum Marketers Association of Nigeria (IPMAN), in a statement, revealed that the ex-depot price of petrol at the Lagos depots is around N479.50 per litre.

 

 

According to him, the cost of 33,000 litres of petrol tanker has increased from N7.7 million pre-subsidy removal regime to N21.8 million post-subsidy period.

 

 

Abdul-Kadri Mustapha, who reached out to EnergyDay on behalf of the IPMAN Northern chapter, confirmed that marketers have been struggling to raise capital to order the product from the depots.

 

 

Lamenting the implication of the new directive by NNPCL on the nationwide distribution of the product, Mustapha noted that as of December 2022, about 400 trucks were pre-ordered and paid for, but the depots have asked for full payment reflecting the new ex-depot prices, before the products can be supplied.

 

 

He said, “The national body of IPMAN has met with NNPCL over this and the depots and NNPCL are not willing to see reasons why they should release the products at the old ex-depot prices.

 

 

“What we have done therefore is to cut our orders from three trucks to one, and this is likely to lead to supply shortages and product scarcity,” Mustapha said.

 

 

He noted that the depots in Lagos are selling petrol to marketers at around N490 per litre, while the depots in Warri are selling at almost N500 per litre, adding that loading expenses cost an average of between N50/litre and N60/litre.

 

 

Mustapha, therefore, revealed that it is difficult for marketers to operate with NNPCL’s pump price of between N487/l and N557/l when over N560/l is incurred to move the products from the depots to the filling stations.

 

 

“We invest close to about N27 million to lift products to any parts of the North especially Borno and Yobe.  We need the understanding of our customers, because it is impossible to sell at NNPCL’s price. This has threatened our profit margins and it is unsustainable to operate at a loss,” the IPMAN Northern representative noted.

 

Dr Muda Yusuf, Executive Director, Centre for the Promotion of Private Enterprise (CPPE) encouraged the NNPCL to offer a discount of 10 per cent to petroleum products marketers in order to mitigate against the impact of the new pump price on the cost of services and food items.

 

 

The ED of CPPE said the discount would demonstrate the Federal Government and NNPCL’s sensitivity to the social and economic impact of the subsidy removal during the transitional phase of subsidy removal.

 

 

Dr Yusuf further asked the FG to urgently facilitate competition in the importation and refining of petroleum products in order to end the country’s current monopoly structure of the supply of petroleum products.

 

 

According to him, the NNPCL is currently operating a monopolistic supply structure for petroleum products, and the best strategy is for the government to protect the consumers by creating a competitive framework.

 

 

Dr. Yusuf said that the NNPCL, is partly responsible for the exploitative pricing of petroleum products such as diesel, aviation fuel and petrol, as the sole importer of the product.

 

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