The Petroleum Industry Act (PIA) has failed to break the monopoly in Nigeria’s petrol import market, as the Nigerian National Petroleum Company (NNPC) Limited continues to dominate the sector and is currently the sole importer of petrol into the country.
This development comes amidst ongoing foreign exchange volatility, which has significantly impacted the ability of major and independent oil marketers to participate in the importation of petrol.
At a meeting between key oil marketers in the country and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) on Tuesday to address the issues of incessant scarcity of petroleum products, the NMDPRA chief executive officer, Farouk Ahmed, emphasised that the NNPCL is currently the sole importer of petrol into the country.
This is as the major marketers lamented their inability to import petroleum products, despite having active licences to import.
The PIA, which was signed into law in August 2021, was aimed at reforming the country’s oil and gas industry, including the downstream sector. One of the key objectives of the PIA was to encourage competition and attract private investment in the importation and distribution of petrol. However, the reality paints a different picture.
According to industry experts, the NNPC Limited has maintained its stranglehold on petrol imports due to its ability to access foreign exchange. This advantage has made it difficult for independent marketers to compete.
“The NNPC Limited’s dominance in petrol imports is a direct result of the forex challenges faced by independent marketers,” said an industry analyst who spoke on condition of anonymity.
Forex volatility has also led to a significant increase in the cost of importing refined petroleum products, with independent marketers bearing the brunt. This has resulted in a situation where many independent marketers have been forced to either scale down their operations or exit the market altogether.
On the recent shortage of petrol across the country, Ahmed blamed it on the logistics problem faced by NNPC Limited in moving the product from offshore to onshore depots.
He stressed that though the government was encouraging local refining of petroleum products to reduce imports, it would compel oil marketers to buy from Dangote Refinery as the decision was commercial.
“We allayed the fears of the marketers and we told them that Dangote refinery is a major achievement in our country because in the past we were importing every litre of petroleum products we required except those supplied by modular refineries. And as an oil producing country, we believe at NMDPRA that we should support our local industry. And that is why we encourage our marketers to patronise our local refineries.
“But, at the same time, it is a commercial decision that they will have to make between the suppliers and the clients. NMDPRA will not determine how much it is sold or how much you are buying. It is their own decision to go to Dangote refinery and purchase, and for Dangote refinery to determine the price it sells.
As a regulator, we are only interested that the nation is well supplied”, he added.
Speaking on behalf of the companies, the CEO, Matrix Energy, Mr. Abdukabir Adisa Aliu said the companies were ready to support the government in its effort to increase energy sources for Nigerians.
“It is the country first and it is when you have a good country that the marketers will be able to operate and the consumers would be able to buy. I think the decision of the federal government supersedes all other decisions that we have. We are all in alignment with the decisions of the government and plead with Nigerians to be patient”, he stated.
Meanwhile foreign exchange crisis and other operational challenges in the downstream sector of the petroleum industry have reportedly impacted the actual landing cost of Premium Motor Spirit (PMS), popularly called petrol.
Efforts to get an actual landing cost figure from the NNPCL has been difficult as our Correspondent is yet to get feedback from the Company.
However, oil marketers have sought an end to the dollarisation across the fuel supply chain whereby Nigeria Maritime Administration and Safety Agency (NIMASA) and Nigeria Ports Authority (NPA) charges are paid in dollars, saying the practice puts undue pressure on the naira and destabilises the system.
Speaking at the Major Energies Marketers Association of Nigeria (MEMAN) Quarterly Press Webinar and Engagement with the topic ‘‘Advantages of Autogas (LPG and CNG) and the Evolving Price of PMS, the managing director of 11 Plc, formerly Mobil Oil Plc, Tunji Oyebanji, said ‘‘prices of gasoline (petrol) in a fully deregulated environment would probably be closer to the price of diesel’’.
The executive secretary of MEMAN, Clement Isong, said he wouldn’t be able to speak categorically on the landing cost of petrol because members of his group had ceased to import fuel.
He expressed worry that when the market operates an exchange rate model that is speculative, it further fuels inflation and makes the cost of replacement difficult, saying rates have been fluctuating.
“With this scenario it becomes difficult for me to determine the actual landing cost of petrol because rates have moved from N1,900 to a dollar to N1,800 and now to N1,600. So, in this case, it becomes difficult to adopt a particular exchange rate for the purposes of calculation.
“If I give you a number that doesn’t contextualise what I am saying to you, and I don’t know the opportunities in the market because I am not in the market, so, I want to be extremely careful in telling you what the landing cost is. Rather, I would rather say you should direct the question to NNPC because it is in a better place to answer since it is the one importing,’’.
The immediate past national president of IPMAN Elder Chinedu Okoronkwo, and executive secretary of Petroleum Dealers Association of Nigeria, PEDAN, corroborated the above position.
They said any figure not from NNPCL will be speculative.
‘N200bn Debt: IPMAN shelved strike following Reps intervention’
Meanwhile, the Independent Petroleum Marketers Association of Nigeria, IPMAN, has suspended its planned strike after the intervention of the National Assembly, LEADERSHIP can report.
The association had a few weeks ago declared that it would shut down the 30,000 stations operated by its members across the country if the federal government failed to pay the N200 billion it owed marketers.
Last month, IPMAN threatened to cripple the supply of Premium Motor Spirit over the non-payment of N200 billion bridging claims.
The IPMAN specifically said the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had refused to clear the debt, which had continued to accrue since September 2022.
Bridging claims are payments made by the government to oil marketers for the transportation of petroleum products loaded from depots to various states across the country.
Yahaya Alhassan, chairman of the IPMAN Depot Chairmen’s Forum, who delivered the ultimatum in a communiqué issued in Abuja, declared that the consequences of the government’s inaction would be severe.
He warned that every IPMAN member’s outlet, spanning from the northern to the southern regions and from the east to the west, would be forced to close its doors.
Despite assurances from the government, including directives from the Minister of State for Petroleum Resources (Oil) to clear the debt within 40 days, IPMAN claims that only a fraction of the owed sum, a paltry N13 billion, had been paid.
However, in a chat with the LEADERSHIP on the planned action, immediate past national president of IPMAN, Elder Chinedu Okoronkwo, said the association would not embark on such action.
Okoronkwo, who is now the Association’s Board of Trustees treasurer, while offering an update on consultations among stakeholders, said the National Assembly had already intervened in the matter.
He said a delegation from the association had met with the Speaker of the House of Representatives who had assured that a committee will be constituted to profile the companies and the debt portfolio so as to ascertain how much the government is owing and draw up a payment plan to offset the debt.
“We passionately considered the plea because we are a responsible organisation that wouldn’t want to further exacerbate the current queues at filling stations and add to the suffering of the masses.
“Since the government has shown signs of mediation, I don’t think the timing of the strike is good because this country belongs to all of us, and as a responsible organisation we will not do anything to jeopardise the fragile peace we have at the moment,” he declared.
NMDPRA boss, who briefed newsmen on the outcome of the meeting with key oil marketers, assured Nigerians that depot owners and members of IPMAN will not cut supply as the NMDPRA had started the process of paying the debt owed the depot owners with verified documents.
