BY ANDREW OJIEZEL, Lagos
Organised labour and oil marketers have expressed divergent views on alleged moves to increase the pump price of fuel following the rise of crude oil price to above $60 per barrel in the international market.
While labour warned against the increase, the Independent Petroleum Marketers Association of Nigeria (IPMAN) said with dwindling margin returns to marketers, a price increase is inevitable.
The Minister of State for Petroleum Resources, Timipre Sylva, had on Tuesday at the official launch of the Nigerian Upstream Cost Optimisation Programme, urged Nigerians to be ready to bear the pains of the proposed hike.
The minister said with no provision of subsidy in the 2021 budget, Nigerian National Petroleum Corporation (NNPC) cannot continue to bear the cost of under-recovery.
Reacting to the minister’s position, president of the Trade Union Congress (TUC), Comrade Quadri Olaleye, expressed disappointment with the way and manner the government was handling relating to increment of fuel anytime there is a little rise in the international market.
The TUC helmsman said he is surprised that the government never for once deemed it fit to bring down the price of petrol when there was a fall in the price of crude oil in the international market.
Olaleye said, “Why is it that the government is always in a hurry to implement an increase anytime crude oil price rises in the international market? Last time when the price went down in the market, the Nigerian government didn’t reduce the price of PMS.
“Why are they now rushing to increase it? They need to be intelligent with it if they don’t want more problems in this country. Besides, we are still expecting the report of the technical committee set up last time by February 22. So, why the rush
But the national president of IPMAN, Chinadu Okoronkwu, attributed the ongoing debate on increase in the pump price of petrol in the country to a rise in the price of crude oil due to the monopolistic posture of the NNPC in the importation of the product.
Okoronkwu who spoke with our correspondent in a telephone chat noted that until the federal government creates the enabling environment that would allow independent marketers to import products, the deregulation of the sector will remain a mirage.
He attributed the planned pump price hike in the price of petrol across the country to the dwindling margin returns to marketers.
According to him, a situation where marketers are struggling with decreasing profit margin in a free market can only lead to pricing fixing by operators.
When asked if his association has directed its members to increase fuel price, he said there is no official statement from the government (NNPC) in that regard.
He however stated that business in a deregulated environment is flexible, stressing that, while prices either go up or come down, his association is worried about declining margins.
His words: “The only area we are talking about is how marketer’s margin can come up with the reality of the market dynamics. That is what the challenge is. A situation where you buy products for N5million and you are getting N10, and you are now buying the same quantity for say N7million and the margin remains the same N10 is frustrating.
“That is the only area we think is affecting us adversely and despite that we are still serving the public by making sure that there is product everywhere with a little margin.”
On what should be done to increase the margin, he said, “This can only happen when everybody is allowed to import petroleum products. NNPC may be going to Europe market to buy products while we choose to go to Russia or somewhere else but a situation where the source of supply is from one point – NNPC in this instance – you will have disparities. That is why we are saying ‘give us the same enabling environment so that we can bring products.”
He stated that independent marketers are not importing products because they cannot get the dollar needed at the same rate as NNPC.
“Getting dollar at the rate NNPC is being given is the key factor. If we have the same access to foreign exchange we will also do the same thing, even less, because by the time we buy from different markets, you will see people getting products from market where the prices are lower and the products are good”.
On its part, Major Oil Marketers Association of Nigeria (MOMAN) called for nation debate on the way forward as to how to maximise the benefits of deregulating the downstream sector of the nation’s oil and gas sector.
In a statement titled, “After Deregulation, What Next?” the chairman of MOMAN, Adetunji Oyebanji, attributed the challenging situation the country found itself to the inability of the national oil company and individual operators to refine crude oil locally.
He said, “Despite being a country blessed with petroleum resources, we still import refined products. Even though refining would not start in Nigeria immediately, as a result of a whole catalogue of diverse and varied reasons which will not be listed here today, it is necessary that we as a Country have some clarity as to when optimal internal refining capacity will return to Nigeria.
“We need to collectively and as a nation, track the progress of work at all the new refineries under construction across the Country to ensure they are delivered timely, efficiently and sustainably. If need be, private investment should be brought in to facilitate the rehabilitation and upgrade of the NNPC refineries for the efficient growth of Nigeria’s internal refining capacity and to ensure energy sufficiency for the Country.”
On the way forward, he said, “MOMAN is calling for a national discourse among all stakeholders including Government, Labour, Civil Society Organizations, the Organized Private Sector and Operators, not on the merits or demerits of petrol subsidy removal, but on the initiatives that can be taken to ease the impact of the subsidy removal on the most vulnerable in our society.
“MOMAN remains committed to the sustainability and institutionalization of a viable downstream petroleum industry for the social and economic growth of our Country, Nigeria.”www