By Our Correspondents
Nigerians are now obviously walking slowly and with heavy steps, typically because of exhaustion and harsh conditions not only inflicted by COVID-19 but insensitive policies of government.
In quick succession of applied hardship, the federal government has ordered inflation of electricity Tariff beginning from September 1, 2020 and immediately followed by jump in pump price of petrol.
Not minding citizens peregrinations, Government on Wednesday announced increment in the price of product saying it will now be sold for N151.56 per litre.
This was contained in a statement issued by the Pipelines and Product Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC).
A statement signed by D.O Abalaka, of PPMC said the new price takes effect from Wednesday September 2.
It stated “Please be informed that a new product price adjustment has been effected on our payment platform.
“To this end, the price of Premium Motor Spirit (PMS) is now one hundred and fifty-one naira, fifty-six kobo (N151.56k) per litre.
“This takes effect from September 2, 2020.”
But the recent price change has drawn various reactions from the downstream stakeholders in the oil and gas sector.
Although, the agency insists that the monthly guiding prices would still allow reasonable returns to operators, many of the stakeholder operators like Independent Petroleum Marketers Association of Nigeria (IPMAN), Major Oil Marketers Association of Nigeria (MOMAN), and the Petroleum Products Retail Outlets owners Association of Nigeria (PETROAN) complain of the effect of the price changes to their business.
PETROAN President, Dr Billy Gillis-Harry, while speaking on the new development said his members have already been notified of the new change by Depot operators.
He said, the Depot owners are now selling at N151 per litre and by implication for any marketer to cover overheads and other expenses implementation of this new prce regime will see Nigerians buying petrol at between N161 and N161. 50 a litre.
“In the past when there was no cap, we add just N2 on a liter but today for us to survive we are looking at adding N10 on a liter.
The issue here is that there is no competition and we all rely on the Nigerian National Petroleum Corporation, NNPC for product. Even when we decide to import we cannot access forex” Gillis- Harry said.
Gillid-Harry who is also President, Bilview Energy Limited, insists that only a round-table, stakeholders’ engagement between the various downstream group operators, the leadership of PPPRA, NNPC, the Department of Petroleum Resources (DPR), and the ministry of petroleum resources, will solve the problem.
On his part, national president of the Independent Petroleum Marketers Association on Nigeria, IPMAN, elder Chinedu Okoronkwo initially claimed that his Association is yet to receive the memo, but actual selling price cannot be determined until they begin to load based on the new price regime.
But unconfirmed report said that most depots have detained trucks that had loaded on old price.
On his part Chairman of the Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, recommended that petrol should be closer to N155 per litre.
Oyebanji, who is the managing director/chief executive officer of 11Plc (formerly Mobil Oil Nigeria Plc), said this on Tuesday on CNBC Africa.
Petrol price was increased by marketers to between N148 and N150/litre in August, as the Petroleum Products Pricing Regulatory Agency remained silent as regards the guiding retail price for the month.
Following the sharp drop in crude oil prices which led to the reduction in the pump price of petrol in March, the PPPRA had said it would advise the Nigerian National Petroleum Corporation and oil marketing companies on the monthly guiding retail price at which the product shall be sold across the country.
Oyebanji said the under-recovery of N5.35bn recorded by the NNPC in June had to do with the inventory losses that would have occurred because of the reduction in prices at the time.
He said, “However, going forward, we still note that there is still an element of subsidy because when you look at the prices that were posted for the month of August, for instance, NNPC is still retailing petrol at N145 when really the price should be closer to N155.
“If you look at the template the PPPRA has been using in setting prices, you will find that if you just apply even the official exchange rate and Platts for the month of August, prices at the pump should be significantly higher than where there are today.
“Obviously, something is not clear as to what really is happening. We suspect that there may be some issues to do with how margins are being applied to the various operators and the various subheadings within the template.
“So, we will continue to work with government to try and get clarification on this subject but definitely, it is very clear that there is still an element of subsidy.”
Oyebanji said the marketers would continue to engage the relevant agencies of government, particularly the PPPRA, to get an increase in their margins.
He said, “The margins were changed in 2008; then they were not touched for another eight years, and we are trying to get an improvement of that because that will directly impact our bottom line.
“However, we believe that when subsidies are removed, and you allow for price liberalisation, which means that the market will fix prices at the pump, then that will allow full cost recovery by all the operators, and with that, it means that more investments will be attracted to the industry at all levels of the value chain.
“If that happens, then that means more employment, growing the economy, and ultimately, Nigerian can become a refinery hub for West Africa and Central Africa and earn more foreign exchange.”
Oyebanji urged the government to move beyond subsidy removal and to full liberalisation.
Recall that the federal government in April bowed to long-standing pressure to restructure the downstream segment of the Nigerian oil industry through the removal of fuel subsidy.
This comes as the global oil industry continues to grapple with the low demand and subsequent price slump that have been caused by the Coronavirus pandemic.
According to the GMD of the Nigerian National Petroleum Corporation (NNPC), Malam Mele Kyari, Nigeria would no longer be paying for under-recovery or subsidy on petrol, especially due to the current development in the global oil sector.
In July, Kyari revealed that the federal government had saved over $400 million following the removal of its fuel subsidy policy in 2020.
The NNPC boss said he does not expect that the policy which had over the years drained the country’s scarce resources would be returned even when crude oil price rebounds.
According to Kyari, the federal government would deploy the amount saved to the development of critical infrastructure in the country.
The government had said it would no longer be paying for under-recovery or subsidy on petrol.