3 November 2009
Sopuruchi Onwuka — Last weekend, the features feared as the likely outcome of the dreaded market deregulation burst out in full on the eve of November 1 which government initially slated for full deregulation of the downstream petroleum sector.
Tension had started building as the weekend approached, and despite the highly publicised massive petroleum products cargoes of the Nigerian National Petroleum Corporation (NNPC), acute scarcity of prodcuts suddenly hit the market.
On October 31, almost all the filling stations in the country scaled down sales by limiting service outlet to customers to only few pumps and causing the motorists tom form long queues that cause traffic stalemate in major causeways.
On November 1 precisely, it became extremely difficult for motorists to get fuel anywhere as only very few service stations opened to customers even as sales attendants were on ground at their various retail pumps awaiting signal from dealers on when to start selling and at what rate.
During the confusion, Business Champion observed, all known means of cheating, extortion, intimidation, price manipulation and underdispensing of products prevailed at the filling stations. Just outside the filling stations, illegal hawking of the produts promptly sprng up as desperate motorits who lost in the fierce contests turned to hawkers to fuel their cars.
Of course, the hawkers found it easier to buy the products at the pumps, and they sell off the products just in the premises of the filling stations while bigger hawkers loaded products in vans to other locations for sale.
Within two days, illegal sale of petroleum products at unauthorised places bounced back and continued to boom while licensed reatil sites operated by authorised marketers scaled down activity understandably to provide market for rewarding illegal outposts.
The situation which plunged both motorists and commuters into severe misery continued till the evening of the day at the end of which some of those that queued in the fuel lines since morning or noon went home with gloomy faces and empty tanks.
The result of the fuel situation on Monday morning was expected as most commuters that feared serious transport occlusion were early at bus stops, begining an early scramble that lasted into early afternoon.
The situation has since eased but the period it lasted was also marked with steep jumps in transport fares, ranging from 50 percent on short bus routes to over 300 percent on fast track motorbikes.
While rascality ruled the market for days, there was no visible efforts by the Department of Petroleum Resources (DPR) to rise to the challenge of enforcing disciple in the market by any means. All calls put to the officials of the agency were not taken an d no explanation has been provided.
The confusion experienced in the period followed uncertainties over the actual date for full implementation of deregulation in the downstream petroleum market.
Minister of Petroleum Resources, Dr. Rilwanu Lukman, had in announcing government's determinantion to fully deregulate the fuel market stated that November 1 would be the deadline for activation of the policy measure primarily aimed at saving money for government and also open the sector for private sector investments.
As November approached, the Director of DPR, Mr. Billy Agha, called all marketing groups to a meeting where he warned them to prepare for imminent deregulation of the sector, threatening to draw down severe sanctions on any marketer caught in sharp practices.
He also announced that NNPC placed order for about 128 cargoes of petroleum products to keep the market wet in the high demand yuletide season and ahead of market deregulation. He failed to confirm the actual date of deregulation of the market.
Before the meeting between DPR and the marketers, Dr. Lukman had also declined to disclose the date of deregulation of the market to newsmen during a workshop organised by the Organisation of Petroleum Exporting Countries (OPEC) in Abuja.
Marketers in the country have shown high level of indignation over the strategies adopted by government in deregulating the market, pointing at the massive import of products by NNPC as return of state monopoly at a time government was singing a different tune.
They also accused the Petroleum Products Pricing Regulatory Agency (PPPRA) of withholding approval for private imports, a situation they argued deprived them of equal commercial opportunity.
In seperare and several statements, different marketing groups accused NNPC of favouritism in allocation of its strategic reserves to private throughput facilities on tariff bases.
Major marketers in the country also pointed out that huge debts owed them by PPPRA, shut out from further imports and concentration of supply in the hands of NNPC combined to post negative outlook for the market as it transits from commercial regulation to liberalization.
They explained that the massive import by NNPC was an uncommendable business decision, arguing that it would inevitably lead to congestion at the ports, build demmurrage cost on the products and post huge losses at the end.
The dispute between the marketers and NNPC gradually degenerated to media war as
some media reports quoted sources in the major marketing firms as alleging that the imprts were fraught in sharp practices that lined the pockets of key officials of the corporation and its subsidiaries in products trade.
Group spokesman of NNPC, Dr. Levi Ajuonuma, had countered the allegations published in a radical national daily as mischievious and unfounded. He accused the markeing firms of deliberately working to sabotage the deregulation policy in order to continue reaping from the subsidy provosions.
Hemaintained that the NNPC's imports were afficiently scheduled in a manner that would not lead to congestion and undue accummulatgion of demurrage costs.
He explained that the corporation was through the imports building its products stock to ensure adequate supply of petroleum products across the country.
He urged marketers to desist from products hoarding and the practice of dispensing fuel with only one nozzle at their fuel stations, explaining that any marketer found doing so would have their stations closed down by the Department of Petroleum Resources, DPR.
Following the allegations of market manipulation and kick backs amounting to N75m daily leveled against NNPC/PPMC, the Committee on Petroleum Resources (Downstream) in the House of Representatives which has oversight functions invited all the parties to the allegation to give their own side of the story.
The committee which investigated the allegations declared on Friday that the report was totally untrue and admonished the media to report responsibly and project the image of Nigeria positively.
House of Representatives weekend passed a vote of confidence on the Pipeline and Products Marketing Company (PPMC), the procurement and market supply arm of the Nigerian national Petroleum Corporation (NNPC), absolving it of allegations of monopoly and sharp practices.
The house however ordered the Petroleum Products Pricing Regulatory Agency (PPPRA) to liberalize fuel import to offer equal commercial opportunities to all players in the Nigerian domestic market.
The Managing Director PPMC while supporting this view stated that NNPC/PPMC was the supplier of the last resort in the market, adding that NNPC follows due process in the award of quarterly importation of Petroleum Products as approved by PPPRA.
He described the publication as baseless and unethical.
In their different submissions, both Major Oil Marketers Association of Nigeria (MOMAN) and the Petroleum Products Pricing Regulatory Agency (PPPRA) confirmed that granting of import permits was outside the functions of the NNPC.
In condemning the publication the secretary absolved Major Marketers of any complicity in the publication. He stated that the concern of Major Marketers was to be involved in products importation in order to remain in business and contributing its quota in the downstream sector of Nigeria economy.
The Chairman Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) also absolved his group of involvement in the said publication, describing it as diversionary.
The experience of last weekend stoked fears that a lot of work still needed to be done tom achieve trust annd coherence among players in the market and government agencies that monitor activities in the market.
Another issue also waiting to be resolved is the mounting social opposition agbainst the dereglation policy. The opposition would gather more reason to stand firm against the policy if there is no collaboration among players in efficiently distributing supplies to the market irrespective of source. And the best way to achieve this is to guarantee equal commercial opportunity for all players in the market to lock in a fair competition.
This way, rising efficiency in the sourcing and distribution channel as each player deploys own strategies would continuously beat down prices until an equilibrum is struck.
Moreover, the experience of las week confirms that the market requires a stronger policeman to contain the pervassive malpractices at the retail end. Otherwise, any attempt to deregulate the market without appropriate checks on the excesses of retail dealers would be a guarantee of chaos and firm justification for opposition to the policy.
Be the first to Write a Comment!
Copyright © 2009 Daily Champion. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
