Petrol marketers yesterday, raised concerns about the downturn of deregulation of the downstream sector of the country’s oil and gas industry, insisting there is a need for the Federal Government to make foreign exchange available at a subsidised rate.
The marketers, at a meeting with the Nigerian Midstream Downstream Regulatory Authority (NMDPRA) in Abuja yesterday, were worried at the rate businesses in the sector are being grounded.
This comes as the NMDPRA insisted that the government is considering every option that would address challenges of the marketers, while ensuring that supply of the product is sustained.
The marketers admitted that the current pump price of Premium Motor Spirit (PMS) does not reflect market realities, adding that the Nigeria National Petroleum Company Limited (NNPCL) maintained a dominant role due to unavailability of forex, which marketers are unable to access at the I & E window.
With the high price of diesel, the National Association of Road Transport Owners (NARTO) at the meeting also demanded for an increase in freight as the haulage firms noted that the state of roads in the country has gone from bad to worse.
The marketers also asked the government to end dollarisation of local activities, especially by the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigerian Port Authority (NPA).
Chief Executive Officer of NMDPRA, Farouk Ahmed, noted that the Federal Government is considering options that would sustainably address concerns of the sector. He noted that NNPCL would be instrumental to the marketers’ sustainability as the government considers approaches to ease challenges of the dollar crisis.
“NNPC has assured of supply and marketers have expressed their concerns about availability of forex in order to enable them to import. We as regulators continue to say the market is open for everyone. We have issued licences to all those who have applied, over 90 marketing companies have been issued licences.
“We have given them access to all they require, the support that they need in order to ensure there is constant supply of petroleum products in the country,” Ahmed said.
President of NARTO, Othman Yusuf, said most trucks are parked and out of business due to prevailing challenges in the sector. Yusuf noted that the state of the road, especially within the South-south and Southeast region has made crossing to the North unbearable.
“We have informed them categorically that we are no longer making profit. That is the reason trucks are parked along the garages and they understood the situation. I believe they will do something about it,” he said.
Executive Secretary of Major Oil Marketers Association of Nigeria (MOMAN), Clement Isong, said it was important for the challenges to be brought to the regulator, adding that “we are having challenges in terms of inevitability of forex and the illiquidity of the I & E window.”
Also, chairman of Depot and Petroleum Marketers Association of Nigeria (DAPPMAN), Winifred Akpani, said profit in the sector is being eroded due to the prevailing situation, noting that the price is not where it should be.
This comes as oil prices rose by about four per cent yesterday to about $88 per barrel on the backdrop of the Israeli and Palestinian war. Chevron, operator of the Tamar gas field offshore in southern Israel has shut down production at the field following instructions from the Israeli energy ministry.
“Chevron Mediterranean Limited was instructed by Israel’s Ministry of Energy to shut in production at the Tamar Production Platform,” the local unit of the U.S. supermajor said in a statement published by Reuters.
Meanwhile, the Group Chief Executive Officer of NNPCL, Mele Kyari, yesterday, again denied reports that the Federal Government has backed down on its complete removal of petrol subsidy, despite concerns of a de facto return as pump prices have not moved since July, despite a more than 30 per cent rise in oil prices.
Specifically, media reports in the last two weeks have speculated that the government has been paying subsidy on petrol to keep the pump price from skyrocketing beyond the current average of N620 per litre.
However, emerging from a meeting with President Bola Tinubu at the Presidential Villa, Abuja, Kyari insisted that there is no subsidy whatsoever, because NNPCL is fully recovering its costs of supplying the product.
However, with latest development, NNPCL has again become the sole importer of petrol because private firms are unable to obtain forex, four months after imports were opened up to private players.
Nigeria, Africa’s largest oil exporter, imports nearly all its fuel as it does not refine to meet the demand of its 200 million citizens. In recent years, it has swapped crude for fuel, depriving it of a source of U.S. dollars.
Opening up petrol imports to the private sector was part of reforms by President Tinubu to wean the country off fuel subsidies. Some firms began imports in July but according to Kyari, they were now struggling to get forex to import petrol.
The NNPCL helmsman said: “No subsidy whatsoever. We are recovering our full cost from the products that we import and sell to the market.
“We understand why the marketers are unable to import. We hope that they do so very quickly and these are some of the interventions the government is doing. But there is no subsidy.”
On the fuel scarcity that has been noticed in some states and Abuja over the weekend, Kyari blamed the development on a mixture of bad roads, competition among marketers and forex challenges.
According to him: “We have seen in very few states pockets of very low queues. This is not unconnected with the road situation as we’re seeing the number of blockades on our roads crossing products from the southern depots into the northern part of the country, and it takes them a much longer time now.
“They have to reroute their trucks around many locations for them to be able to reach destinations and that created delays and some supply gaps. But that has been filled and we do not see any of such problems again.
“Secondly, because of the full deregulation that we have in this sector, marketers are now competing among themselves. So, you must have noticed some fuel stations will reduce prices by two or three Naira so customers will naturally run to the places where you have that reduction in prices.
“That creates panic, because for those who don’t know why they are doing it, they will think that there’s something wrong happening, or there’s an ominous sign of scarcity and people start queuing up in the fuel stations.
“Otherwise, there is no challenge. Supply is robust. We have over 1.4 billion litres of product in our hands, both marine and land. Also, there are no issues around delivery of those products into the land. So, there is no fear, nothing to bother about.
“As you all know, the government is doing so much to ensure supply of FX into the market. We know this FX market will stabilise. Current I&E window is around N770.