By Obas Esiedesa
Oil marketers have blamed lack of access to foreign exchange at competitive price for staying away from the importation of premium motor spirit (petrol), ten months after the Federal Government deregulated the downstream sector of the oil and gas industry.
The government had in March 2020, announced that it will no longer pay subsidy on petrol consumption in the country. Since then, petrol pump price has risen from N125/litre to the current N161-N163 per litre.
But despite the opening up of the market, state owned Nigerian National Petroleum Corporation (NNPC) has remained the sole importer of the product, with the private sector largely staying away.
Speaking at the weekend on the issue, National President of the Independent Petroleum Marketers Association of Nigeria, IPMAN, Chinedu Okoronkwo said marketers were ready to be involved if forex is made available to them at the rate available to NNPC.
Okoronkwo noted that making forex available at the same rate would create a level playing field for marketers and also create healthy competition.
“It will no more be a one man show like it is right now. I believe government is thinking in that direction as a short term measure pending when most of the new refineries will be up and running. Which is not going to be far”, he stated.
Also speaking in a telephone interview at the weekend, the Executive Secretary of Major Oil Marketers Association of Nigeria, MOMAN, Mr. Clement Isong also blamed lack of foreign exchange for keeping away private sector operators.
“The major problem”, Isong noted “is foreign exchange. There is no foreign exchange availability and even NNPC when they bring in products; they bring it through a facility called DSDP, Direct Sale Direct Purchase.
“It means they are swapping crude directly for refined products, so there is just no foreign exchange for people to import at the correct exchange rate.
“For instance, for fully deregulated products, foreign exchange is available, and diesel and kerosene are imported but it is available not at the same rate but for PMS the PPPRA, Petroleum Products Pricing Regulatory Agency, calculates foreign exchange at CBN rate and that window is illiquid. There is no foreign exchange there. It means if you bring in product based on that foreign exchange rate, you cannot sell the product in the market”, he explained.
Isong urged the Federal Government to implement full deregulation in the sector, saying the benefits go beyond product importation, as that would bring in investments into the downstream sector.
According to him, “Full deregulation is not just good for my members, it is good for Nigeria, it is good for the country because when you do not deregulate, you go back to subsidy and subsidy is a very poor way of managing the country’s resources”.
He pointed out that refining in-country would allow Nigeria benefits more than the $50 per barrel it earns from the export of crude oil, especially with the take off of the Africa Continental Free Trade Agreement, AfCFTA.
“We want full deregulation. Government needs to find the best way of educating Nigerians until we can arrive because that is the silver bullet. With AfCFTA, what deregulation does is that it enables refineries to take roots. All the Dangote refinery, the BUA refinery and all the modular refineries came because you said you are going to deregulate.
“If you deregulate, those refineries will set up, then the next thing that will happen is, coming from those refineries, all the petrol and diesel that you are buying from abroad, you will start refining at home, so you are beneficiating your crude at home.
“So, apart from the fact that you will make enough refined products to cater for your market, you will have excess which you would now be exporting and earning foreign exchange at a far higher value to Nigerians”, he added.