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DSDP, high cost, interest rate responsible for scarcity

•Our tanks, depots are empty —DAPPMA, IPMAN
•Fuel subsidy rises to N1.4bn daily
•Four ships have discharged fuel — NPA
•We’re working to ensure products get to filling stations — NUPENG

By Ndujihe Clifford, Udeme Akpan, Victor Ahiuma-Young, Godfrey Bivbere , Michael Eboh & Ediri Ejoh
L
AGOS—OIL marketers, under the aegis of Depot and Petroleum Products Marketers Association, DAPPMA and Independent Petroleum Marketers Association of Nigeria, IPMAN, yesterday, exonerated themselves from the current fuel crisis across the country, saying that currently, there is no fuel in the depots and tanks of its members nationwide.

This has dampened hope for a speedy resolution of the fuel crisis which has almost grounded the country.

A Lady buying fuel from roadside along Psychiatric road, Rumuigbo, Port Harcourt to avoid long queque at fuel stations. Photo: Nwankpa Chijioke

Again, this is contrary to claims by the Nigerian National Petroleum Corporation, NNPC and its downstream subsidiary, the Petroleum Products Marketing Company, PPMC, that fuel vessels are discharging the commodity in ports across the country on a daily basis.

They also denied that their members were hoarding fuel, saying “sadly, some people have blamed marketers for hoarding fuel. Unfortunately, this is so far from the truth. Hoarding fuel is regarded as economic sabotage and we assure all Nigerians that our members are not involved in such illicit acts.”

DAPPMA, in a statement by its Executive Secretary, Mr. Olufemi Adewole, said: “While we cannot confirm or dispute NNPC’S claims of having sufficient product stock, we can confirm that the products are not in our tanks and as such cannot be distributed. If the products are offshore, then surely, it cannot be considered to be available to Nigerians.

We pay PPMC/NNPC in advance — DAPPMA

“NNPC imports and distributes through DAPPMA, Major Oil Marketers Association of Nigeria, MOMAN, and Independent Petroleum Marketers Association of Nigeria, IPMAN. Our members pay PPMC/NNPC in advance for petroleum products and fully paid up PMS orders that have neither been programmed nor loaded is in excess of 500,000 metric tonnes, about 800 million litres, as at today and enough to meet the nation’s needs for 19 days at a daily estimated consumption of 35 million litres.

“We all know that we presently run a fixed price regime of N145 per litre for PMS without any recourse to subsidy claims; however, we also have no control on the international price of crude oil.

“We understand that the NNPC meets this demand largely through its DSDP framework. However, due to price challenges on the DSDP platform, some participants in the scheme failed to meet their supply quota of refined petroleum products, especially PMS, to NNPC. This is the main reason for this scarcity.”

Adewole added that since Hurricane Katrina, the international price of PMS had not dropped below $600 per metric tonne, while the exchange rate used and the interest rate charged by banks are N306 to a dollar and 25 per cent respectively.

He noted that any time the NNPC assumes the role of sole importer, there are issues of distribution, because it is marketers who own 80 per cent of the functional receptive facilities and retail outlets in Nigeria.

He said: “We, petroleum products marketers, do empathise with all Nigerians who are going through difficulties at this time, spending hours on fuel queues because of the current fuel scarcity due to no fault of yours.

“Sadly, some people have blamed marketers for hoarding fuel. Unfortunately, this is so far from the truth. Hoarding fuel is regarded as economic sabotage and we assure all Nigerians that our members are not involved in such illicit acts.

“As it stands today, NNPC has been the sole importer of PMS into the country since October 2017. We all know that we presently run a fixed price regime of N145 per litre for PMS or petrol without any recourse to subsidy claims. However, we also have no control on the international price of crude oil.

“Current import price of petrol is about N170/ltr. NNPC, which absorbs the attendant subsidy on behalf of the Federal Government, is the importer of last resort. We understand that NNPC meets this demand largely through its DSDP framework; however, due to price challenges on the DSDP platform, some participants in the scheme failed to meet their supply quota of refined petroleum product, especially PMS, to NNPC. This is the main reason for this scarcity.”

Mr. Mike Osatuyi, Operations Director, IPMAN, in a telephone interview with Vanguard, said: “Most IPMAN members do not have fuel to sell at this time. When we have, we will endeavour to sell to motorists and other users of the product.

“The government is currently trying to address the problem through NNPC. The corporation cannot do it alone.

“The government knows the right thing to do. The government now makes more money from the export of crude oil. The excess of the money gets into the nation’s excess crude account. It can, in consultation with the governors, use part of the fund to subsidise fuel importation.

“The government cannot solve the problem alone. There should be adequate cooperation and collaboration with the major and independent marketers, especially those that have the capacity to make positive impact. But the lasting option is for the government to deregulate the downstream sector so that marketers, who would be assured of recovering their costs and making profit, can go into the business of importing fuel.”

NNPC

The NNPC, yesterday, through its spokesman, Mr. Ndu Ughamadu, said the corporation has been supplying fuel to DAPPMA and IPMAN, urging them to compliment NNPC’s efforts towards tackling the scarcity.

The NNPC had expressed empathy and strong solidarity with members of the public over the lingering challenge in accessing petroleum products across the country, just as it reeled out multiple measures to end the unfortunate situation before the end of the year.

Group Managing Director of the Corporation, Dr. Maikanti Baru, had told journalists at a media briefing and follow-up tour of some fuel stations in Abuja on Sunday that measures were already in place to bolster the current fuel supply and eliminate the extraneous factors that have led to the persistent petrol queues.

He had said within the last two weeks the national truck out capacity had been jerked up to an average of 1,500 trucks, translating to 52 million litres per day which is much higher than the normal consumption of 850 trucks per day across the various depots in the country.

Also, the Corporation had placed a 24-hour loading and sales operations in all depots and NNPC Mega Stations across the country, while marketers have been instructed to do same.

NPA

Meanwhile, the Nigerian Ports Authority, NPA has confirmed that four vessels conveying Premium Motor Spirit, PMS, have discharged their content between December 21 and yesterday, while 10 are awaiting to berth at the ports in Lagos.

Speaking with Vanguard, Mr Ibrahim Nasiru, Principal Manager, Corporate and Strategic Communications of NPA, said the harbour department was presently working at berthing the remaining 10 vessels to ensure that efforts by the Federal Government to end the fuel scarcity was actualised.

He said: “We are trying our best to make sure that we berth the remaining vessels that are all carrying PMS. I cannot tell you whether it is NNPC or not but I can confirm to you that the products are there.

“We want to tell Nigerians that these products are there, they are not interested whether it belongs to NNPC or not, that is not the concern of Nigerian. Is the products available? Yes. We have the facility to berth all of them at the same time.

“When the vessels are berthed, then the berthing formalities will begin but the important thing is to berth them first. As soon as we berth them every available strategy has been put in place to discharge them.”

Prices differ

Meanwhile, price of the commodity differed at press time. While fuel stations in Victoria Island, Lekki, Oregun-Ikeja of Lagos, sold the product at the recommended retail price of N145, those in the outskirts sold the product for between N200 and N220.

At Iba and LASU areas of Lagos, fuel stations sold the product for N220, yesterday, while at the Agbara axis on the Badagry expressway, the product was sold for N200. Also at the Ojodu area of the state,  Alakuko on Abeokute Express road, the product was sold for N200.

In most states outside Lagos, the product sales for between N220 and N300, though NNPC stations that have the fuel sold at the recommended price. In Umuahia, Aba, Owerri, Port Harcourt, Enugu, Ore, Warri, Benin, it’s between N220 and N300.

In Abuja metropolis, fuel stations sold at the recommended retail price, but in the outskirts, fuel stations sold at what ever price they wanted, but most often above N200.

NUPENG role

Speaking on the fuel situation, immediate past Lagos Zonal Chairman of Nigeria Union of Petroleum and Natural Gas Workers, NUPENG, Alhaji Tokubo Korodo, said NNPC brought some products Friday night and since then, members of the Petroleum Tanker Drivers, PTD branch of NUPENG, had been working round the clock to ensure that the products got to the filling stations as soon as possible to ease the suffering of Nigerians.

Korodo, who is also the Lagos State Chairman of United Labour Congress of Nigeria, ULC, said: “We are not the cause of the scarcity but we are suffering the effect. NNPC brought some products on Friday night and since then, our members have been working round the clock to ensure that the products get to the filling stations to ease the scarcity. Our PTD members were stopped from enjoying the Christmas holidays to ensure that the products are loaded and distributed to the filling stations. They loaded from Ejigbo and Mosimi, on Saturday, on Sunday even today (yesterday). Some will load to take to Abuja directly while others are loading to cover the Lagos area. The problem is that everywhere was dry until now. If NNPC maintains this momentum, the scarcity will ease out, but if there is any gap, the scarcity will return because as today, only the NNPC is importing products.

“The marketers cannot import because of the forex crisis and the landing cost which today is between N171 and N173. Since the Government is not ready to pay subsidy, it is now left with NNPC to import. You are aware that crude prices have increased in the international market. So, we are doing our best to ensure that Nigerians get the products whenever the products are available. That is what we are doing at present. We pray they can maintain the momentum and do not allow any gap for the scarcity to return.”

Fuel subsidy

However, the government through the NNPC is currently expending N1.4 billion to subsidise fuel importation into Nigeria.

PPPRA has stopped the issuance of its template that used to provide details.

But Vanguard investigations showed that while the pump price of the product was pegged at N145 per litre, the total cost incurred in the process of importing the product stood at N187 per litre.

This means that the government subsidy amounts to N42 per litre and N1.4 billion daily as the nation’s daily consumption stood at 35 million litres.

Investigations by Vanguard showed that refiners, who now procure crude oil at $65 per barrel (unlike $40 per barrel) in the past for refining have passed the cost in form of high price to fuel importing nations, including Nigeria.

The huge cost, it was gathered, has affected the ability of NNPC, currently providing 95 per cent of the nation’s daily requirement to import very many cargoes at once to tackle the scarcity.

Deregulation

Investigations showed that the government is under serious pressure to deregulate the downstream sector of Nigeria’s petroleum industry in order to reduce the huge dependence on NNPC, currently importing over 95 per cent of the nation’s fuel need.

Specifically, it was learned that relevant government ministries and agencies have started mounting pressure on the government to deregulate the sector in order to pave way for major and independent marketers to venture into fuel importation.

But as the Vice President, Prof. Yemi Osinbajo noted, the Buhari-led administration may not deregulate the sector at this time because of political considerations and in order not to pass the burden to already impoverished citizens.

However, Mr. Muda Yusuf, Director General of the Lagos Chamber of Commerce and Industry, disclosed in an interview that the subsidy could pose as serious source of worry to the government next year, especially as it was not reflected in the 2018 budget.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.