We Will Continue To Experience Scarcity And Price Disparity Unless—-Osatuyi

Mike Osatuyi

The National Controller of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mike Osatuyi in this interview with Oriental News Nigeria says scarcity and pump price disparity may linger until supply improves

Excerpt

FG and Marketers have made to stabilise fuel supply, why do we still experience pockets of queues?

There is no any other thing that causes scarcity other than shortage in the supply system.

If we have enough supply in the system, there will not be any scarcity.

I can remember last year, when we had enough supply in the system, depot owners were selling petrol to marketers below NNPC template. It happened, when template was N77.66 some people were selling N75.77 below the template because there was supply.

They want to dispose off the products to have good turn-over. So scarcity is a function of short supply and supply is a function of permit. But not just to bring in product, if government did not issue permit there is no way we are going to have enough supply.

But basically, again because of the economy, revenue generation and foreign exchange reserve of government is depleting fast. The foreign exchange is not enough to withstand that kind of high volume supply because as you can see, going to one year now, the price of crude has been going down day by day and this has affected foreign reserve of the country, so government has to manage the available reserve so that it will not gp down embarrassingly.

NNPC has come up with measures to revive the refineries what do you think is still the problem?

We have to tell ourselves the truth. If for the past 16 years we take the statistics on what has been spent on Turn-Around-Maintenance (TAM) of the four refineries, it is nationally embarrassing.

It is not acceptable and it is a waste of scarce resources because I can tell you that billions of Naira has gone into the TAM without any fruitful result.

The solution to me therefore, it that if they are not functioning, they should be sold. I have said it and I am still saying it again, because the money we have spent on TAM over the years will give us another three brand new refineries.

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Thank God, one of the way out is that we have got Dangote now coming up with 6,050 barrels per day refinery. The facility is expected to come on stream in the first quarter of 2018.

That one is above the four refineries combined which have not been working. If Dangote comes up, we will have products available as well as jobs for our people.

The Central Bank of Nigeria (CBN) has also offered to support the project with Forex.
So there is no much fear and being a private refinery if there is guarantee of feedstock the initiative will go a long way to stabilise the system.

Also, the minister of state, Ibe Kachikwu said government would build new refineries and this is a welcome development provided it will be done on time and their cost of production will match that of Dangote and if Dangote exports products as promised it will boost governments Forex earning provided they will open up the crude purchase either local or abroad to the refinery.

I listened to Aliko Dangote and he said the facility will be exporting refined product and will earn Forex which is a good initiative and a good project.

So by 2018 some of these challenges would be over.

What is the position with IPMAN refinery project?

I can confirm to you that IPMAN is talking to many investors and you know refinery is not something you can build in just 6 months or there about.

We have to perfect the plan, get government approval. It is a good thong that IPMAN is coming up with such project.

Kogi and Bayelsa states are being proposed to host the project and am sure that the president of IPMAN and the Exco which I am part of will facilitate and realise the project.

However, I cannot say precisely when it will come onstream but we are perfecting the papers.

What is IPMAN position on subsidy?

The position of IPMAN is that subsidy should be removed so that the industry can be opened up and operators really do business.

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If subsidy is removed now, with a clause that government will provide clement environment for the operators.

I need to emphasise on Forex availability, because if you deregulate and you make company A to access Forex for example N198 per Dollar and you ask company B to go and source Forx at black market rate say N300 a Dollar and both should bring same product to the same market and sell, you know it cannot work.

But if we are all going to the black market to source for Forex then we now compete and do cost effectiveness and then give customers value for their money.
And if they want to give Forex to genuine importers alone then they should give us and I can tell you that if they give us $50,000 per week that will be about $240 million per month that can bring us 16 cargo’s.

It can be shared 50/50, like NNPC will bring 16 cargo’s a month and marketers bring 16 cargo’s per month and government will provide Forex for all parties.

But if they deregulate when the Forex is not available then that will be unfortunate.

Between 2014 and 2015 for several months petrol was sold everywhere for N87 per litre but because it also bothers on the supply issue which we are talking about if demand surpasses supply there is going to be price crises and there is no solution to it.
It is like sharing 10 trucks for 40 people, how will it work? But when you have 50 trucks for 40 people then there won’t be any back door dealing.

But I can confirm to you that NNPC has stepped up importation to meet growing demand so in the next 3 weeks prices will be even across the country.

We still have price disparity because some marketers still have old stock which was bought at higher price.
But again if all stakeholders agree there will be even price all over the country.

One of the issues to be addressed is union dues. If we have harmonised union due that will not affect current template like members due there will be harmony.

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But sometimes some pay higher dues which affect the template. The template can work if all stakeholders agree to work together.

However the dues not withstanding if we address supply deficit other things will fall in line. For instance if am buying product from depot A and the union due is N5,000 and union due in depot C is N20,000 I will definitely buy where it is cheaper.

How much fuel do we really consume?

You cannot get exact figure because consumption is not equal daily all over the world.
You can have 700 vehicles today and tomorrow you have between 800 to 1,000 vehicles but on the average it is hovering between 40 to 45 million litres per day.

How can we fight corruption in the system?

By making sure we are all patrotic and ready to work for the country. By showing we are ready to alleviate peoples suffering, creating future for our children.

Also government should build 6 coastal tank farms for the country, one in Port Harcourt, one in Warri, 3 in Lagos and one in Calabar to serve as alternatives to pipeline to mitigate whatever problem we face currently.

They will serve as alternative to pipelines while government depots in coastal areas would service truckers. If we load about 400/day we are talking about 2400 trucks daily.

What is the situation with kerosene supply?

Kerosene has been deregulated from 1st of January 2016. Subsidy has been removed like diesel. You know in the last 14 years diesel is available, sometimes it is sold for N100 other times is N120 per litre.

Prices differ and people bring in products and it is working, and now we want to apply it to kerosene and it will work.

We may have different prices based on how you source your Forex and it will be available everywhere at different prices and government will not pay subsidy anymore.

So money saved from the subsidy can be deployed to develop other sectors.

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