PUNCH
- Market forces will create crisis, OPS warns NNPCL
Oil marketers have yet to commence the loading of Premium Motor Spirit, popularly called petrol, despite assurances by the Federal Government that the commodity will be available this weekend.
Saturday PUNCH gathered that though some PMS vessels had arrived in the country at the NNPC’s Apapa and Port Harcourt depots, loading by independent marketers had yet to begin.
As a result, petrol queues in major cities persisted on Friday despite the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, earlier promising that the product would be massively available before the weekend.
But the National Operations Controller of the Independent Petroleum Marketers Association of Nigeria, Mustapha Zarma, said on Friday that the loading of products at depots had yet to commence, stressing that the queues could last till Monday.
“Maybe the improvement in supply will start tomorrow or Sunday but as of yesterday (Thursday) and today (Friday), there has not been much loading of products. And even if there has been loading today, I don’t think it is much.
“That is why the queues are still visible. We cannot confirm the massive release of products as announced by the minister until maybe Monday,” Zarma stated.
On whether the petrol being expected was the one from the Dangote refinery, Zarma replied, “I am not in a position to answer that. It is NNPC that should answer that.”
NNPC earlier stated on Thursday that it would start lifting products from the Dangote refinery on September 15, 2024.
Zarma had told our correspondent on Thursday that about 2,000 petrol tankers were still at various NNPC depots waiting to lift products.
He said, “The queues in Abuja are heavy. Nobody is loading. Right now, most of the tickets of independent marketers, which had been paid for since the last three months have not been cleared to load.”
The President of the Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, also confirmed that marketers had yet to start lifting petrol as required.
“We are aware of what the minister said, but we don’t have products yet. We have not started lifting the product as it is supposed to be and that is why the cost is very high in filling stations that have it.
“People struggle so much to get the product to sell to keep their businesses running. Once the products are readily accessible, the price will stabilise and the queues will clear. That is the situation.”
Presidential aide attacks Dangote
Meanwhile, a presidential aide said the Dangote Refinery was running away from pricing in order not to look bad to Nigerians.
The official, who spoke on condition of anonymity because of the sensitivity of the matter, noted that the refinery was the sole determinant of pricing, adding that it could not sell fuel below its cost price.
“The petrol price cannot be less than N1,000; that was why Dangote decided to push it to the government. So, if the price is determined by the Federal Government, people can attack the government. How does a private company ask the government to fix its price?” the official stated.
In a statement on Thursday, the Dangote Group Chief Branding and Communications Officer, Anthony Chiejina, had said the PMS market in Nigeria was strictly regulated and the refinery would wait for relevant government agencies for the price.
He said, “The PMS market is strictly regulated, which is known to all oil marketers and stakeholders in the sector, hence we cannot determine, fix, or influence the product price, which falls under the purview of relevant government authorities.”
However, the NNPC, in another statement by its spokesman, Olufemi Soneye, made a contrary claim about the price.
The company held that the PMS market had been deregulated and market forces would determine the price of the product.
Soneye was quoting the Executive Vice President of Downstream, NNPC, Adedapo Segun, saying Section 205 of the Petroleum Industry Act, which established NNPC Ltd, stipulated that petroleum prices were determined by unrestricted free market forces.
“Additionally, the exchange rate plays a significant role in influencing these prices,” the NNPC submitted.
Market forces
Experts told our correspondent that if the NNPC and the Federal Government allowed market forces to determine the price of Dangote petrol, it might be as high as N1,000 per litre.
“Can Nigerians buy petrol at N1,000 or N1,100?” a depot operator queried, asking the government to intervene to ensure affordable energy for Nigerians.
Speaking with our correspondent, an energy consultant and expert, Henry Adigun, said the cost of producing a litre of PMS is an average of N750, without any additional cost.
According to Adigun, this could rise to N800/litre when other margins are added, which will also increase when it gets to the filling stations.
He stated that the NNPC could decide to buy from Dangote and sell at a subsidised rate to the masses. The consultant, however, called for transparency in the entire process.
“Anybody that is expecting N400 or N500 petrol is just wasting his time. It won’t happen,” Adigun added.
Similarly, Professor Emeritus, Wumi Iledare, held that the PIA did not empower anyone to set the price of petrol, saying it should be determined by the forces of demand and supply.
Iledare stated that the Nigerian Midstream and Downstream Petroleum Regulatory Authority had the responsibility to ensure there was no price gouging.
The don advocated for a willing seller, willing buyer arrangement, saying the NMDPRA should not allow the NNPC to be the sole buyer of Dangote PMS.
He rejected the payment of shortfalls on PMS, nothing that the sale of petrol to all marketers in naira would crash the price.
Until the market becomes fully deregulated with many participants, Iledare suggested that Nigeria should practise what he called price modulation with a committee looking at important determinants of demand and supply to agree on a price to be reviewed as the situation changes.
He also said the price of diesel in Ghana was one cedis higher than that of petrol.
OPS warns NNPC
The Organised Private Sector on Friday warned that allowing market forces to determine the prices of fuel would bring about more volatility in the sector.
In a statement made available to Saturday PUNCH, the National President of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture, Dele Oye, said the chamber condemned the recent announcement by the Minister of State for Petroleum, Heineken Lokpobiri, that the Federal Government would no longer interfere in the pricing of PMS in the country.
He said NACCIMA was particularly alarmed by the potential impact of this decision on businesses, consumers, and the overall economic landscape, adding that the deregulation of PMS prices, coupled with the influence of foreign exchange illiquidity, was likely to result in significant volatility and unpredictability in fuel prices.
