Nigerians should expect another fuel price hike soon -Marketers

Petroleum products marketers have hinted of another pump price hike for Premium Motor Spirit (PMS), also called petrol.

This is coming as black marketers now sell the product for between N300 and N400 a litre in major cities like Abuja, Calabar and Aba.

The Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN) says access to dollars at the official investors and exporters (I&E) window has been a great challenge.

President of Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Dr. Prince Billy Harry, gave the warning in a chat with reporters.

Harry said system inefficiency and scarcity of foreign exchange are about to create dysfunctional market operations that would bring about price distortion beyond the control of marketers.

Harry is not alone in expressing this uncertainty as the national president of the Independent Petroleum Marketers Association of Nigeria (IPMAN),  Chinedu Okoronkwo, has sounded a similar warning.

Both of them, who spoke to our correspondent on phone, blamed independent depot operators for creating a precarious market situation.

According to Okoronkwo, the depot operators unilaterally hiked ex-depot price of products, particularly petrol.

“We independent marketers source products from these depots and they have refused to sell at regulated government prices. What you observe in Lagos is simply a situation where marketers pay higher and then adjust their pump to recover cost and retain customers.

“They are not concerned about profit but to sustain their businesses until the government takes a firm stand on deregulating the market,” said Okoronkwo.

Harry, on his part said, with the exchange rate above N800 to a dollar, the public should expect another round of hike in pump price of petrol except exchange rate is stabilised.

According to him, landing cost of petrol to outlets is within the region of N184 to N189 per litre.

“We went round Abuja yesterday and we found out that a litre of petrol in the black market sells for between N350 and N400. On the other hand our retail outlets sell between N190 to N200 a litre depending on source of procurement.

“We monitored the situation in Calabar, Aba and Port Harcourt as well as Lagos. What we are doing presently is to ensure our members maintain a reasonable price band. No one appears to be challenging the system but I want to warn that we may experience another round of price hike as we approach the festive season, ” he said.

He warned that deregulation at this point will escalate the situation since the country relies on importation.

Okoronkwo, on his part, asked for the intervention of the government as the ongoing crisis is beyond what marketers can handle.

However, both of them said availability may be assured going by their conversation with the Nigerian National Petroleum Company Limited (NNPCL), but cannot assure of price stability.

NPA Charges Dues In Dollars, Say Depot Owners

Meanwhile,  the chairman, Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Dame Winifred Akpani, has blamed

acute shortage of foreign exchange (forex) in the official market as pushing the naira to N860 against a Dollar.

This, according to her, has broadly altered dynamics for the importation, distribution and marketing of petrol.

Akpani, who disclosed this during a press briefing by its Governing Council in Lagos, called on the government to give petroleum marketers access to foreign exchange at the official Central Bank of Nigeria (CBN) rate to enhance the supply and distribution of petrol across the nation this Yuletide.

According to her, shortage of Forex coupled with several unauthorised levies and bad roads are among the factors making fuel importation and distribution burdensome for members.

Akpani further said the burden of sourcing forex through the parallel market for transactions domiciled in Nigeria had left petroleum marketers in “dire straits”.

“Accessing USD (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,” she said.

Akpani noted that, in addition to core operational expenses that are denominated in dollars, petroleum marketers also contend with sourcing funds from the parallel market to pay for fees and levies, some unauthorised, that are also charged in dollars.

“For example, to charter a vessel to convey 20,000 MT of PMS within Nigeria for 10 days, freight charges are denominated in dollars, that comes to about N220 million at 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 FX official/parallel market differential,” she said.

According to her, for the same transaction, Jetty fees, also charged in dollars, amount to N15.4 million at official forex rates and N30.8 million for petroleum marketers who source from the parallel market.

In addition, Jetty berth is charged in dollars and comes to N2.2 million at official forex rate and N4.4 million at parallel market rate, while port dues, charged in dollars by the Nigerian Ports Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA), which are charged in dollars, come to N71.51 million at official FX 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. This is a passionate appeal to the government as we can confidently state that accessing forex through the CBN window will significantly enhance capacity and facilitate seamless supply of PMS and birth a regime of sustainability in terms of storage, distribution, and supply across the nation,” she added.

The NNPCL, which historically served as the supplier of last resort, is now the major oil downstream company in Nigeria with the acquisition of OVH and has full access to dollars at CBN’s official rates. The NNPC also has access to products through swap arrangements.

Akpani decried the absence of a level-playing field that guarantees access to dollars for all marketers at official rates, noting that having the NNPC as the sole importer of PMS was not sustainable considering the huge consumption of the product.

She said strategic decisions must be made in the industry to ensure Nigeria takes full advantage of expected growth in oil products demand across Africa.

“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,” she stated.

Akpani said DAPPMAN considers the government’s plan to remove subsidy in 2023 as the right decision that will reposition the sector for sustainable growth and development, while freeing 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 PMS, DAPPMAN assures Nigerians of its ability and willingness to work assiduously to ramp up supply as the government addresses the challenges of FX availability in the sector,” she said.

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