•‘Secret approvals of pump price a departure from PIA objectives’
• Marketers seek full deregulation
For the second time in about seven months, the Federal Government again acceded to arm-twisting antics of marketers, yesterday, by quietly approving an increment in the pump price of Premium Motor Spirit (PMS), otherwise known as petrol.
According to information circulated to marketers and obtained by The Guardian, a new regime of fuel prices was announced and immediately implemented by marketers.
The decision to adjust prices, according to insiders, is to encourage marketers to open up for business rather than the ongoing phased rationing causing scarcity, long queues and exploitation of Nigerians by independent marketers and black market operators.
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Although the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and NNPCL have remained silent on the development, the same pattern was deployed about six months ago when prices were adjusted to between N160 and N170 per litre.
In the message sighted by The Guardian, major marketers were informed of the changes across geographical zones. PMS is expected to sell for N185 per litre in Lagos, N190 within the Southwest, South South and North Central zones, N195 per litre in the South East, FCT and North West zones, while the commodity is expected to sell for N200 per litre in the North East.
Already, major marketers have begun implementation of the new rates across the zones.
With the announcement, many outlets hitherto under lock and key in Lagos have begun to open up for consumers, creating options for those in dire need of the product, while queues gradually dissipate.
In Abuja, the pump price of the produce is now N194 per litre at retail outlets operated by the Nigerian National Petroleum Company Limited (NNPCL).
The price hovers between N200 and N220 at filling stations operated by independent marketers in the city centre while the price of the commodity is higher in satellite towns such as Nyanyan, Kwali, Zuba, Suleja and Kubwa.
The Guardian gathered that confusion in the Presidency over when to remove subsidy on PMS is causing disquiet in the attendant ministry and its regulatory bodies.
Sources in the petroleum ministry said the decision was reached, last year, to allow marketers and depot owners sell PMS at a higher but reasonable price.
With the 2023 budget making adequate provision for subsidy, the statement credited to the Minister of Finance that subsidy might be done away with in April is seen as yet another inconsistency of the Buhari government, which industry experts say, is causing distortions in the system.
Indeed, members of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) and Major Oil Marketers Association of Nigeria (MOMAN) were in Abuja, last week, where they held discussions with the Chief Executive, Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, on the way forward.
The depot owners and marketers were said to have told the authority that they could no longer guarantee adequate distribution of PMS at the current rate amid increment in the cost of logistics.
A DAPPMAN official said: “The NNPCL always say they have 30 days sufficiency. That is not the point now. Before now, distribution logistics were never an issue but it has become a major issue now because items such as tyres, batteries and tear and wear of tanker drivers’ vehicles are all creating a harsh operating environment for us. We are buying at a fixed price when all other components that are not within the control of the government are increasingly making things difficult. Even in the Lagos area, we have to sell above the official price for us to be in business.”
He also queried why the government was holding the downstream sector by the jugular saying: “Inflation is rising on a daily basis, with the cost of things going up every day. And the government expects us to sell PMS at the price? Government must appreciate the sacrifices we have been making over the years. The time for a full deregulation of the sector is now, otherwise Nigeria will go bankrupt before this government exits in a few weeks.”
Energy economist, Prof. Wunmi Iledare, said any secret approval of the pump price of PMS is a departure from the transparency and accountability objective of the Petroleum Industry Act.
He said if the secret pricing approval is true, then the objective of PIA, which aims at creating a framework for a commercially oriented national oil company for Nigeria, is not on a fast track.
“With such secret action, the well articulated PIA framework to remove amorphousness of the industry is wobbling. No justification in the PIA for NNPC Limited to seek approval to determine the price of PMS secretly, if that is true,” Iledare said.
Former Special adviser at Nigeria Extractive Industries Transparency Initiative (NEITI), Dr. Dauda Garuba, said: “There is nothing secretive about it. The fact is that the increment has been in place for a long time now, with the government not saying anything to oppose it. This automatically points to its coming to stay. Also, this is not the first time it is happening under this administration.
“My thinking is that subsidy should be allowed to go forever, so the country can stop ongoing stealing in the name of subsidy.”
Energy expert, Emeka Okwuosa, said the lingering fuel crisis is sad, especially the passive and tight-lipped attitude from the national oil company.
Okwuosa expressed concern over lax regulation in that sector, stressing that the price control has been hijacked.
He equally decried the way the fuel subsidy regime has been handled in recent times, saying the process is not clear. According to him, increasing the pump price quietly, despite the subsidy in place, shows lack of transparency.
“We need, as a matter of urgency, deregulation of the oil sector. Piecemeal deregulation and cutting secret deals will not solve the problem. With hindsight, we would have thought that the new NNPC is commercially driven and will be anchored on transparency and accountability. What we are seeing is a sham whereby NNPC is still being teleguided by the Federal Government,” Okwuosa said.
He urged the government and NNPC to fix their inefficiency and lacklustre regulation, adding that there is need for succour for the masses.
Managing Partner, BBH Consulting, Madaki Ameh, said the management of the subsidy on PMS has been quite inept and inefficient.
“There is no alternative to full deregulation of the downstream sector of the oil and gas industry. The current hide and seek approach, which is based on half-truths and outright falsehood, is totally unsustainable. No country borrows money to subsidise consumption. But in Nigeria, nothing makes sense in the manner the economy is managed or mismanaged under this government,” he said.
The rising cost of PMS is mainly boosted by the devaluation of the naira, the Chief Executive Officer of Dairy Hills Limited, Kelvin Emmanuel, said. He argued that the current scarcity is proof that a weak naira contributes 70 per cent to inflation in Nigeria.
“Asking Independent Petroleum Marketers Association of Nigeria (IPMAN) to sell PMS at below their cost price from the depots in Lagos (which is N235-N240 per liter), at the regulated price of N165 is the reason why the two highest grossing items on the 2023 Appropriation Act are: debt servicing on consolidated debt, under-recovery for petrol subsidy,” he explained.
THIS came as the organised labour movement, once again, reiterated its unequivocal opposition to removal of petrol subsidy.
National President of the Association of Senior Civil Servants of Nigeria (ASCSN), Dr. Tommy Okon, berated the government over the move, saying labour will defend the interests of the working class once the pronouncement is made.
“This is a worrying situation indeed. Nigerians did not enjoy the Christmas and New Year celebrations because the price of petrol was above the reach of the common man. Apart from Abuja and Lagos, the pump price of petrol was above N250 per litre in most places.
“With inflation rising and salaries remaining stagnant, what is left for Nigerian workers? Government has not reviewed the wage upward and inflation is eroding the small money they have.
“Cheap petrol makes transportation to and from work easier a little bit. Government now wants to take that away and replace it with nothing? No! That is not acceptable. Why is the government not talking about palliatives for the workers before contemplating removal of the subsidy? Labour will not be quiet over the matter,” he stated.
Emmanuel maintained that the most viable solution to petrol scarcity is fast-tracking launch of the commercial refinery in Lagos, saying at a full capacity utilisation of 650,000 barrels per day, it will refine 50 million litres daily, representing 142 per cent of the real daily consumption in Nigeria.
He also submitted that the politicisation of petrol subsidy proves that the Buhari-led Federal Government lacks tact in dealing with the subsidy crisis.
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