Marketers, FG at loggerheads – The Sun Nigeria

By Adewale Sanyaolu

The The re-emergence of fuel queues in most of the country has come as a brutal shock to Nigerians despite several assurances from the importer of last resort – the Nigerian National Petroleum Company (NNPC) Limited – that it has sufficient in stock to last 60 days.

However, the NNPC claim contradicts the reality on the ground as most depots in Apapa, Satellite Town, Lagos and other parts of the country claimed that they do not have enough fuel. .

The Major Oil Marketers Association of Nigeria (MOMAN) recently argued that NNPC’s import volume has fallen by 68% in the past three months, a development that has worsened the fuel shortage situation.

MOMAN Chairman Mr. Olumide Adeosun disclosed that there has been a steady decline in the supply of gasoline from Petroleum Products Marketing Company (PPMC), a subsidiary of NNPC Limited over the past three months.

Giving a breakdown of the declining domestic fuel supply figures, Adeosun said 438,000 metric tons were injected in April, 213,100 metric tons in May and 140,000 metric tons as of June 20, 2022.

He explained that the steady decline in supply over the three-month period has contributed to a large extent to the current supply and distribution deficit.

Adeosun added that the current scarcity of gasoline is further aggravated by the distribution problems created by the unavailability and the continued spike in international prices of automotive diesel (Diesel).

MOMAN members, he said, are working with the authority, NNPC/PPMC, NARTO and other industry players to make product (gasoline) available at pumps and eliminate queues on as quickly as possible.

He warned that MOMAN, as an association, is concerned that the current supply framework cannot guarantee a regular and constant supply to the country given the current state of public finances and unpredictable international supply shortages.

“We therefore recommend gradual price deregulation with targeted palliatives (eg transportation and agricultural subsidies) to the public to facilitate implementation,” he said.

In the meantime, the association recommends that the current single-source strategy be reviewed, while the Federal Ministry of Petroleum Resources, in conjunction with the Ministry of Finance and relevant MDAs, should set up a task force to immediately focus on increasing diesel supply through one of the initiatives to increase local modular refining capacity.

This move, she said, would address supply and distribution challenges.

He also advocated a gradual rehabilitation of existing NNPC refineries to accelerate the supply of middle distillates (AGO & ATK).

”MOMAN recognizes and closely associates the need to address the challenges of high energy and transportation costs occasioned by extraneous circumstances.

“MOMAN will continually do its best to distribute gasoline to its customers across the country and will continue to explore partnership opportunities with other industry players,” he said.

While the federal government has asserted that petroleum traders are making profits, traders, particularly the Depot and Petroleum Products Marketers’ Association of Nigeria (DAPPMAN), have said that current economic realities that have impacted their costs functioning had a negative impact on their operations.

On the other hand, members of the Independent Petroleum Distributors Association of Nigeria (IPMAN) alleged that DAPPMAN members operating private depots were taking advantage of not selling gasoline at the approved ex-depot price of N148 per litre.

They lamented that the high cost of automotive gas oil (AGO), commonly known as diesel, used for tankers had risen by more than 80% from N250 per liter to N800 per litre, saying that with all these costs additional, it was virtually impossible for them to sell at the approved retail price of N165 per litre.

IPMAN, however, has called on NNPC management to investigate the activities of private depots owned by DAPPMAN for their role in the ongoing fuel shortage.

IPMAN National Chairman Debo Ahmed and National Publicity Secretary Chinedu Ukadike in a statement made available to the Sunday Sun expressed concerns over the sale of petroleum products to IPMAN members over the NNPC approved model of N148.00, which was contrary to survival. Of the industry.

“The government does nothing against private deposits that violate the system by overselling. IPMAN members have suffered greatly at the hands of private repository owners. We appreciate NNPC’s efforts to make the product available, but we really suffered a lot of setbacks due to the cost of diesel. We are not saying that there is no availability of petroleum products, but what is available is not enough. The cost of diesel has also increased.

“These two factors have led to profits at the tank farms, where traders buy petroleum products at the rate of N169. 00, at N170.00 above the government controlled pump price. “This unavailability has led to profits being in the hands of commodity depot operations along coastal areas. We also find it difficult to move products from Lagos-Kano-Kaduna as we rely heavily on PDOs as they are located along the coastal areas. So, after considering all these factors, it costs almost N700,000 to transport petroleum products from Lagos to Kano since we are at the mercy of AOPs.

“It is becoming more and more difficult for marketers to sell petroleum products with this small margin. It is easy for traders to move products from NNPCL depots to sell at N165.00 but as we are not getting to N148.00 which is the government model for owners of private depot tank farms to sell to traders, but we come to N160.00, it is impossible for a marketer to use N5.00 to sell petroleum products. This is not viable, considering the cost of maintaining the gas station and also the cost of financing. A liter of automotive gas oil (diesel) is very important and we borrow these funds from commercial banks. We want to take this opportunity to tell NNPC on behalf of traders to make sure we have enough products,” he said.

However, IPMAN’s national operations controller, Mr Mike Osatuyi, said the way out of the recurring fuel shortage was for the downstream to be fully deregulated.

Osatuyi, warned the federal government against continuing to pay subsidies, saying the model was no longer viable.

Speaking in a live interview on national television, Osatuyi said that at the current rate of around $123 per barrel of oil subsidy, it would reach N6 trillion by the end of 2022.

“At the start of 2022, the fuel subsidy budget was N4 trillion. But with the rise in oil prices caused by the Russian-Ukrainian crisis, the figure will reach 6 trillion naira.

“Our plea is for the government to urgently convene a meeting of all value chain actors to find a lasting solution to this problem.”

For his part, DAPPMAN said he empathizes with customers and the teeming Nigerian public over the current distribution issues in the supply of Premium Motor Spirit (petrol) from the various filling stations dispensing at N165 per litre.

“Nigerians will recall that the ongoing war between Russia and Ukraine has had adverse effects on the whole world, including our country, Nigeria, on the global and local fuel and food supply, as the International prices for these items have risen astronomically and more than doubled their former rates since the start of the war, thus causing extreme increases in local prices.

“By extension, the local operating costs of operating our various fuel depots have increased astronomically. The petrol we supply is sourced solely from NNPC Limited’s marketing subsidiary, Petroleum Products Marketing Company Limited (PPMC) for sale to the public at the regulated price of N165 per litre.

“This purchase is being made by depot operators with funds from high bank interest charges, as well as increased vessel rental costs, with which we deliver fuel cargoes to our depots. These costs doubled during the period of this Russian-Ukrainian war.

“Added to this is the scarcity of bunkers (ship’s fuel). We have also experienced astronomical increases in the cost of diesel used to power equipment and machinery at our various depots and points of sale. Depot owners and government have continued to struggle over time to maintain supply of PMS at the current pump price of N165 per liter despite the huge subsidy cost to government and abysmal margins for owners of deposits.

“Without its suspension, the implementation of the Petroleum Industry Act 2021 would have provided an ideal enabling environment by creating the free market in which demand and supply would affect the pump price of fuel. We hereby assure the public that the depot owners, working in concert with NNPC Limited, through its marketing subsidiary, will continue to work hard to ensure product availability nationwide,” it said. he promised.

But, Mr. Ugbugo Ukoha, Executive Director, Distribution Systems, Storage and Retail Infrastructure, Nigeria Midstream Downstream Petroleum Regulatory Authority (NMDPRA), argued that gasoline was a regulated commodity and urged traders to comply with the pricing model .

Ukoha postulated that the conflict between Russia and Ukraine had led to an increase in the cost of automotive gas oil (diesel), which was an essential product used in transporting petroleum products from depots to retail outlets.

He said: ‘So when we saw that it posed a big challenge in the movement of other products, we approached the Minister of State for Petroleum and Mr. President graciously approved that the rate of freight for trucks is increased.

“There is an N10 addition that we will apply to the different routes to allow trucks to move easily to the docks with less load.

“With this kind of government effort, we can only continue to call on operators in this industry to play by the rules.

“PMS is a regulated product and the prices are fixed. The ex-warehouse price is known. The price at the pump remains N165 and the authority is always ready to enforce these rules. We will therefore continue to urge Nigerians to abide by these operating rules,” he advised.

Ukoha said the goal for stakeholders in the coming days would be to close supply gaps and resolve the current gasoline shortage as soon as possible.

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