…As DAPPMAN Seek Forex Allocation, Black Market Sells For N400 Per Liter
Joseph Bakare
The National President of the Independent Petroleum Marketers Association, IPMAN, Elder Chinedu Okoronkwo, has blamed private depot operators for causing price distortion in the downstream oil sector.
Okoronkwo, said the current distortion in pricing of Premium Motor Spirit, PMS, also called Petrol is due to unilateral increase of ex-depot price initiated by operators.
He told Oriental News Nigeria, that except government intervenes the depot operators would continue to distort market operations blaming it on scarcity of foreign exchange.
His reaction is coming as the Chairman, Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Dame Winifred Akpani, placed blame on
acute shortage of foreign exchange (forex) in the official market as pushing the naira to N860 against a Dollar.
This according to her has broadly altered dynamics for the importation, distribution and marketing of petrol.
Akpani, who disclosed this during a press briefing by its Governing Council in Lagos, called on the government to give petroleum marketers access to foreign exchange at the official Central Bank of Nigeria (CBN) rate to enhance the supply and distribution of petrol across the nation this Yuletide season.
According to her, shortage of Forex coupled with several unauthorised levies, bad roads are among the factors making fuel importation and distribution burdensome for members.
Akpani, said the burden of sourcing forex through the paralell market for transactions domiciled in Nigeria had left petroleum marketers in “dire straits”.
“Accessing USD (dollars) for our operations has been an insurmountable hurdle for petroleum marketers. The difference between CBN exchange rate and the Parallel market exchange rate continues to get wider by the day,” she said.
Akpani noted that in addition to core operational expenses that are denominated in dollars, petroleum marketers also contend with sourcing funds from the parallel market to pay for fees and levies, some unauthorised, that are also charged in dollars.
“For exampe, to charter a vessel to convey 20,000 MT of PMS within Nigeria for 10 days, freight charges are denominated in dollars, that comes to about N220 million at official forex rate of N440 and a whooping N440 million for petroleum marketers who have to source forex from the parallel market at N880. This implies an additional cost of N11 per litre for this transaction due to the FX official/parallel market differential,” she said.
According to her, for the same transaction, Jetty fees, also charged in USD amount to N15.4 million at official forex rates and N30.8 million for petroleum marketers who source from the parallel market.
In addition, Jetty Berth is charged in dollars and comes to N2.2 million at official forex rate and N4.4 million at parallel market rate, while port dues, charged in dollars by the Nigerian Ports Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA), which are charged in dollars, come to N71.51 million at official FX rate and N142.796 million for marketers who source forex from the parallel market.
“DAPPMAN hereby calls on the government to establish a level playing field in the sector by giving petroleum marketers access to forex at the CBN exchange rate for their operations. This is a passionate appeal to the government as we can confidently state that accessing forex through the CBN window will significantly enhance capacity and facilitate seamless supply of PMS and birth a regime of sustainability in terms of storage, distribution, and supply across the nation,” she added.
The NNPCL, which historically served as the supplier of last resort, is now the major oil downstream company in Nigeria with the acquisition of OVH and has full access to dollars at CBN’s official rates. The NNPC also has access to products through swap arrangements.
Akpani decried the absence of a level-playing field that guarantees access to dollars for all marketers at official rates, noting having the NNPC as the sole importer of PMS was not sustainable, considering the huge consumption of the product.
She said strategic decisions must be made in the industry to ensure Nigeria takes full advantage of expected growth in oil products demand across Africa. “For us in Nigeria, this will include full deregulation of the sector and a deliberate strategy geared towards creating an enabling environment for all petroleum marketers to add value, alongside the NNPC,” she stated.
Akpani said DAPPMAN considers the government’s plan to remove subsidy in 2023 as the right decision that will reposition the sector for sustainable growth and development, while freeing up funds to shore up the capacity needed to transform the health, education, defence, and transportation sectors among others.
“As we approach the Yuletide and transition to the election year in 2023, the nation needs the full involvement of all operators to shore up capacity and ensure product availability at excellent service levels. While there might be fears regarding possible scarcity of PMS, DAPPMAN assures Nigerians of its ability and willingness to work assiduously to ramp up supply as the government addresses the challenges of FX availability in the sector,” she said.
DAPPMAN added that the Federal Government and the Nigerian Midstream and Downstream Regulatory Authority for emerging gains in the sector, especially, following the introduction of the Petroleum Industry Act.
“There have been important meetings aimed at shaping a sustainable future for the sector. These must continue as the success of the sector in the face of the intervening global energy crisis depends on collaboration and consideration of how operators can shore up capacity on the wings of market-friendly policies and a level-playing field,” Akpani said.
Meanwhile, marketers have hinted of a possible pump price hike for Premium Motor Spirit, PMS, also called petrol.
Already, black marketers now sell the product for as much as N300 to N400 a liter in major cities like Abuja, Calabar and Aba.
President of Petroleum Products Retail Outlets Owners Association of Nigeria, PETROAN, Dr. Prince Billy Harry, has warned of another round of petrol price hike which may likely happen before Christmas.
Harry said system inefficiency and scarcity of foreign exchange is about to create dysfunctional market operations that would bring about price distortion beyond the control of marketers.
Harry, said with exchange rate above N800 a dollar, the public should expect another round of hike in pump price of petrol except exchange rate is stabilised.
According to him, landing cost of petrol to outlets is within the region of N184 to N189 per liter.
“We went round Abuja yesterday and we found out that a liter of petrol in the black market sells for between N350 to N400 a liter. On the other hand our retail outlets sell between N190 to N200 a liter depending on source of procurement.
“We monitor the situation in Calabar, Aba and Port Harcourt as well as Lagos. What we are doing presently is to ensure our members maintain reasonable price band. No one appear to be challenging the system but I want to warn that we may experience another round of price hike as we approach the festive season ” he said.
He warned that deregulation at this point will escalate the situation since the country relies on importation.
