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Fuel Pricing: Need To Create A Balance In The System

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The sale of  premium motor spirit (PMS) also known as petrol at a government fixed price of N145 per litre has been generating heated debates with argument that  the policy is not sustainable. FESTUS OKOROMADU, examines the issues against the backdrop of prevailing ecomomic realities.

Over the last few weeks the debate that has taken the front burner on the political-economy front has been how to avoid the fuel crisis which engulfed the nation during the yuletide and New Year celebration. The federal government through her agencies like the Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation (NNPC), Department of Petroleum Resources (DPR) and others has continue to engage stakeholders in the industry on how to proffer solution to the lingering problem.

Initially, rather than face the reality of what led to the crisis, the government agencies and other industry stakeholders were engaged in the war of words, trading blames as to the cost of the queues which emerged at filling stations in major cities like Abuja and Lagos.

For instance on Wednesday December 20, 2017 the national president, National Association of Road Transport Owners (NARTO), Alhaji Kassim Ibrahim Bataiya, and the national chairman, Petroleum Tanker Drivers (PTD) Comrade Salimon Oladiti, blamed the situation on the activities of some alleged unpatriotic citizens who were involved in smuggling the product out of the country.

The duo who spoke during a stakeholders’ meeting on the challenges of products supply and distribution led by the chairman, House of Representatives Committee on Petroleum Resources Downstream, Joseph Akinlaja , submitted that such activities were responsible for hardship experienced nationwide during the period.

On their  part, the Depot and Petroleum Products Marketers Association (DAPPMA) , Major Marketers Association of Nigeria (MOMAN) and Independent Petroleum Marketers Association of Nigeria (IPMAN) came up with multiple allegations on why the crisis persist.

They include that that the hiccups in the supply of products was due to the inability of the Direct Sale Direct Purchase (DSDP) partners of NNPC to deliver on their business obligations, even as their members made advance payment for products to the Petroleum Products Marketing Company (PPMC), a subsidiary of NNPC which they alleged were not supplies down to the claim that their members were unable to get products at approved ex–depot price of N133.28/litre. All the allegations were refuted by the NNPC.

But while the debate was going on, the group managing director, Dr. Maikanti Baru, disclosed that the landing cost of petrol had increased to N171.40 per litre due to rising cost of crude oil in the international market but insisted that the official selling price of the commodity remains at N145 per litre.

Following Baru’s disclosure it became obvious that the real challenge was not just the availability of the product but the pricing. Unfortunately, since government is insisting on selling at the control price of N145 per litre, private sector operators has left the importation of petrol to the NNPC which is footing the extra charge of N26.40 per litre.

Worst still, the tank farms and other facilities used in the storage and transportation of products are outside the control of NNPC, thus necessitating the need to reach harmony with the private sector operators as to how to deal with the issues at stake.

Consequently, the minister of state for petroleum resources, Dr. Ibe Kachikwu held series of meetings with stakeholders last week, the outcome of which remained secret.

Investigations from across the country showed that petrol now sells for above N200 per litre in most hinterlands thus the control price of N145 per litre exist only in the capital cities where the politicians and elites live.

Speaking on how the issue could be solved the executive director, Centre For Social Justice , Eze Onyekwere, said only openness and truth would save the government of the day from the backlash of its inefficiency.

“It is imperative to state that Nigerians especially in the south- east where I spent my holidays are already paying above the official price of N145 per litre,” he said.

Speaking of the varied pricing of the product he said, “Throughout the holidays, fuel was dispensed officially and without challenge at the petrol stations (not black market) between N220-N250 per litre.” May be the return to N145 per litre is only for Abuja and Lagos, he added.

Similarly, James Ogodo, a Port Harcourt based businessman told Leadership that the product sells for over N200 per litre in parts of the state. The situation is not different from what is obtained in other parts of the country, thus raising the question of who truly benefit from the fixed price of petrol.

Meanwhile, as rightly noted by some stakeholders in the industry, the possibility of petroleum marketers importing products to sell at a discount while the government appears not ready to pay for the balance will live NNPC the sole importer of the product.

Unfortunately, the negotiation with marketers designed to convince them to import products and sell at control price is heading nowhere as the gap of N26.40 per litre outweigh the incentives the government is offering. Beside, the marketers are in business to make profit.

One cannot but agree with The Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) submission that only the rehabilitation of the nation’s refineries can end the recurring scarcity of petrol in the country.

Mr Tayo Aboyeji ,south-west chairman of the union who made the disclosure in Lagos recently, expressed displeasure at the inability of the management of NNPC to resuscitate the refineries after huge billions of naira had been spent on turnaround maintenance.

“It is disheartening to know that despite the fact that the nation is a major producer of crude oil, it cannot refine the product for its local consumption.

“It is ridiculous that for the past 15 years now, Nigerian National Petroleum Corporation (NNPC) had been spending billions of dollars on Turn Around Maintenance (TAM) of the refineries with nothing to show for it.

“If all our four refineries are producing at their maximum output, the country will not be spending billion of naira on importation of refined product, he added.

He noted that, “This is the right time for our refineries to work, the federal government should as a matter of urgency fix the refineries now,” he said.

The chairman urged the NNPC to increase supply of petrol to depots in order to reduce the scarcity nationwide.

Although, Aboyeji, is of the view that it was not time for total deregulation of the sector, the market is already operating under circumstances that shows that it is the way out.

Speaking on petrol stations selling above the official pump price, Aboyeji urged the Department of Petroleum Resources (DPR) to investigate properly before sealing such stations.

“To me, it is not all about the pump price; it is about where they are getting the product and how much they are getting it.

“Are these private depots selling above the ex-depot price of N133.28?

“Since DPR started the sealing of petrol stations that are selling above official pump price, we have not seen them asking questions in private depots how much they are selling to marketers.

“Oil marketers are in business to make money; they cannot get petrol at higher price and sell at lower price.

“It is the responsibility of DPR to find out the source of where the marketers are getting the product before sealing the stations,” he said.




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