Yemisi Izuora
The Major Oil Marketers Association of Nigeria, MOMAN has said it is not pondering on resumption of petroleum products importation at the moment because the regulatory environment is not profit driven.
The Association also observed that the understanding expressed by the Petroleum Products Pricing Regulatory Agency (PPPRA), of possible downward review of pump price of petrol following decline in crude oil price in the international market may not necessarily prompt price adjustment.
The new chairman of MOMAN, Mr. Adetunji Oyebanji, who spoke with journalists in Lagos explained that price adjustment is a function of several factors of which crude pricing is just one of the various indices.
Oyebanji, said the exchange rate is a major determining factor, and that except the present price template is reviewed taking into account all the changing market variables pump price may likely not change in either direction.
He noted that since the Association is operating under a regulated regime, it can only follow guidelines issued by the industry regulator.
The chairman while reacting to a question on whether price adjustment of petrol is convincing and conceivable said, available infrastructure may not support the idea, because beside high exchange rate, other associated costs like, bridging which is done by road takes toll on transportation of products.
He said, marketers are currently operating at huge loss and many operators have shut down operations because the sector is highly regulated and not investment friendly.
“We are currently tied to a margin which is fixed and we cannot adjust. If my input cost is going up and exchange rate is going up it affects our business, pump price has to do with exchange rate, so we have to understand the economics.”, he said.
It will be recalled that the PPPRA, recently in a statement insinuated that Nigerians should expect to pay less for premium motor spirit (PMS) also called petrol with the recent plunge in the price of crude oil in the international market.
According to the agency the reduction in the price of crude oil has led to the price of petrol falling below the government approved pump price of N145/litre.
In addition, the agency said it expects the Nigerian National Petroleum Corporation (NNPC) to start recording over-recovery instead of the under-recovery as has been posting if the trend continues. It also expressed confidence the situation will enable other marketers commence importation of PMS (Petrol).
The General Manager, Corporate Services Department, PPPRA, Apollo Kimchi in the statement issued in Abuja, penultimate week said, “With the recent plunge in the price of crude oil in the international market, the Agency has observed a downward trend in the Expected Open Market Price of PMS, below the government approved pump price of N145/litre.
“It is expected that over-recovery could be witnessed and if this trend continues, thus will enable other marketers commence importation of PMS (Petrol),” he said.
He said, the Association has supported the liberalisation of the downstream sector through the Petroleum Industry Governance Bill, PIGB, as that is the only way that investments can freely flow into the sector.
The chairman explained that the regulated environment has discouraged the Association from making investments in the refinery project as it is capital intensive, and current operating system cannot guarantee return on investment.
On the N800 billion debt owed marketers by government, Oyebanji said so far MOMAN members have received about N237 billion in the form of promissory note, and the Association is engaging the commercial banks on other issues especially on how the notes can become cash.
He expressed the hope that a second tranch of the payment would be made by government soon.