IPMAN,  Oil Marketers Challenge Govt’s Stance On Fuel Subsidy, Predict Possible Scarcity

Daud Olatunji 

Oil marketers, on Tuesday, countered the position of the Federal Government, as they insisted that the current pump price of Premium Motor Spirit (PMS), popularly called petrol, should not be less than N800/litre if there was no subsidy on the commodity.

This assertion came amidst growing concerns about the fuel supply chain and soaring prices at the pump.

Petrol currently sells at between N580/litre and N617/litre depending on the area of purchase, as the Federal Government, through its Nigerian National Petroleum Company Limited (NNPCL), had denied reintroducing PMS subsidy.

On Monday, the Group Chief Executive Officer of NNPCL, Mele Kyari, denied the reintroduction of petrol subsidy and claimed that the pockets of queues by motorists observed in petrol stations across the country stemmed from hiccups in products’ distribution from the South to the North and not a lack of supply.

“No subsidy whatsoever. We are recovering our full cost from the products that we import. We sell to the market, and we understand why the marketers are unable to import. We hope that they do it very quickly, and these are some of the interventions the government is doing. There is no subsidy,” Kyari had stated.

He had made the claim barely 48 hours after the Petroleum and Natural Gas Senior Staff Association of Nigeria confirmed the return of fuel subsidy.

Also, oil marketers had earlier stated repeatedly that fuel subsidy had returned, as they explained that the landing cost of petrol as of last week was N720/litre.

On Tuesday, they lambasted the NNPCL boss for coming out to state that the government was not subsidizing PMS, as they explained why subsidy on PMS had returned.

“I don’t know why the government keeps peddling lies. When they removed the PMS subsidy, a dollar was about N700, and they made us believe that the removal of subsidy would make the supply of products play according to the dictates of demand and supply, looking at forex as the benchmark.

“Now, this is just simple arithmetic. If you removed the subsidy when a dollar was about N700, and today the dollar is more than N1,000, and you are still supplying and giving products at almost the same rate, what is the magic? They are subsidizing products as we speak.

“They are spending billions of naira to subsidize products, and because they know that this country may go on fire if Nigerians buy products at about N1,000/litre, they keep twisting facts. Why can’t they come out and tell the world the truth?” the National Secretary, Independent Petroleum Marketers Association of Nigeria, Chief John Kekeocha, stated.

He said the government went ahead to remove the subsidy without looking at the nitty-gritty involved before implementing the decision.

“You cannot wake up overnight and remove subsidy without considering the pros and cons, only for you to wake up again and start putting back the subsidy into play secretly, and you think Nigerians will not know,” he stated.

… Implications For  Downstream Sector

Asked to state the implications of these concerns in the downstream sector, Kekeocha replied, “I am telling you that in a very short time there will be no product anywhere in this country, apart from the tank farms that have access to diesel.

“This is because many marketers cannot even function well with the cost of diesel. Check the cost of diesel and the cost of supply and distribution. How many marketers can do it and sell at about N600/litre? The cost of landing PMS is over N700/litre.”

Explaining the effect of the cost of diesel on the operations of filling stations, the IPMAN official stated that “when you compute the cost of bringing PMS from Warri to Abuja or other Northern states by an independent marketer, it will land here (North) at more than N700/litre.

“The cost of diesel is now very high, and many marketers can’t afford it, and still sell to compete with the tank farm owners who sell at about N617/litre. Consumers cannot see where the product is sold cheap and go to where it is costly.”

Kekeocha, however, noted that tank farm owners involved in retailing of petrol were few, stressing that such category of dealers were very limited when compared to independent marketers.

Independent marketers control about 80 per cent of filling stations across the country, as a reduction in their operations is going to lead to scarcity in many locations, particularly areas that lack major operators that have tank farms.

“So independent marketers cannot compete right now due to the high cost of diesel and the inability to import due to forex issue, which is why you see that the number of functional filling stations nationwide have been reducing on a daily basis,” the IPMAN official stated.

On whether stabilizing forex would help the situation, Kekeocha replied, “The government cannot address forex because it is not within their control. If the government has to address forex, it means it still has to make it clear that they have decided to bring back subsidy.

“It is only subsidy that can keep the price of fuel at the rate that it is now at about N600 plus. Otherwise any moment from now, the cost of a litre of fuel will be about N800/litre or more. The government didn’t do what they are supposed to do ab initio.”

… Government’s Missed Opportunities

Asked to state what the government should have done earlier, he said, “There is nothing we can do now than to do what we would have done before – make the refineries work. If refineries are working and they are producing at Warri and Port Harcourt, it will reduce the pressure on importation.

“This is also going to reduce the cost of the product locally because the cost of fuel and diesel at this moment is due to the fact that we have to import them, and this is at the current forex rate. You cannot manipulate forex. So we didn’t do what we ought to have done initially.”

On claims by NNPCL that it had enough product, the IPMAN secretary said this was not entirely correct.

“The situation in the downstream oil sector is very painful. How can Kyari go to the open and be telling people that he is not subsidizing the product? He also said they have billions of liters of fuel, and that nothing is going to happen. Let him come out and watch what is happening in town right now.

“You can’t get taxis because most of them cannot get fuel, and their cost is now very high. Many people have packed their vehicles. How many stations are selling? For the few ones that are selling, the queues are endless here in Abuja.”

On his part, the National President, Natural Oil and Gas Suppliers Association of Nigeria, Benneth Korie, said filling stations were closing, as he insisted that fuel subsidy had been gradually reintroduced.

… Calls for Government Intervention

“NOGASA is seriously worried. Between now and December this year, there is need for urgent government intervention to stop the shutting down of our filling stations and parking of our petroleum tankers, all due to the high cost of import

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