21 February 2018

Nigeria: Despite Assurance of No Increase, Petrol Sold At N190.9/Litre in January

Despite assurances from the Ministry of Petroleum Resources, and Nigerian National Petroleum Corporation (NNP), that the Federal Government has no intention of increasing the pump price of Premium Motor Spirit (PMS) also known as petrol, the product actually sold for N190.9 per litre in January.

Besides, there were queues in most filling stations in Lagos, and Abuja, which saw the product selling above the regulated price of N145 per litre.

But the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who blamed the persistent fuel shortage on logistics and policies, insisted that Government has no intention of increasing pump prices of fuel.

The National Bureau of Statistics (NBS), in its January petrol price data, revealed that average price paid by consumers for petrol was 28.4 per cent above 2017 level, as price rose from N171.8 per litre to N190.9 year-on-year.

States with the highest average price of petrol were Osun N228.89; Abia N227.50; and Benue, N223.33, while Zamfara N159.12; Gombe N157.73; and Kogi N152.83 recorded the lowest average prices.

The Bureau explained that fuel prices were collated across all the 774 local governments in Nigeria and the Federal Capital Territory, Abuja, from over 10,000 respondents and locations, and reflect actual prices households actually bought those fuels from the suppliers.

Explaining the partial scarcity and high cost of the product in some filling stations across the country, the Chairman, Ejigbo Satellite Depot, Independent Petroleum Marketers Association of Nigeria (IPMAN), Ayo Alanamu, attributed the current high cost of petrol to the unfair distribution of petrol by NNPC.

"Fuel scarcity within Lagos metropolis is imminent if NNPC fails to reverse to our agreed formula, as IPMAN members plan to stage a protest that would disrupt operations at the depot," he warned.

According to him, IPMAN with over 2,500 members cannot be sharing 13 trucks among them, while the NNPC retail outlets with only 25-stations get over 100 trucks.

"We urged NNPC to follow the agreement we had on 60 per cent for IPMAN, 20 per cent for MOMAN, and 20 per cent for NNPC retails. Current arrangement is unfair, unjust, provocative, and contrary to what existed at the depot petroleum sharing formula arrangement," Alanamu said.

Besides, he said no IPMAN member will buy petrol at N165 per litre and sell at regulated price of N145 per litre, adding that strike by marketers was inevitable if the practice continued.

He noted that due to the skewed allocations, fuel scarcity is beginning to resurface in most filling stations in Lagos, as IPMAN members are unable to access the product from depots in the western zone.

"This has also contributed to the scarcity of petrol and the long queues of trucks awaiting loading at the depots.

"IPMAN marketers hardly load 13 trucks from the depots due to the change in product distribution sharing formula. We were loading in the range of 50 trucks daily before it was reduced to 13 trucks. That is not enough for marketers to distribute to their customers.

"NNPC should ensure effective supply of products to marketers within the western zone, and beef-up storage and loading capacity to at least one million trucks on daily basis."

The President, Lagos Chamber of Commerce and Industry (LCCI), Babatunde Ruwase, said weak compliance with the regulated price of petrol in some parts of Nigeria is largely a symptom of much deeper problems and distortions in the petroleum products supply chain.

He expressed concern over government's reluctance to liberalise the sector and open it up to private sector participation, and called for urgent liberalisation the downstream subject to appropriate regulatory framework, to allow unfettered private participation and investment.

Ruwase criticised the concentration of petroleum products supply in the NNPC, saying: "The arrangement is an inherent entrenchment of monopoly in the NNPC to the detriment of private investors. The midstream and downstream petroleum sectors currently suffer from regulatory regime, which is negatively impacting growth, investment and job creation.

"The current model of managing the downstream is not sustainable. It is at variance with the present administration's vision to diversify the economy, and create jobs. It perpetuates the phenomenon of rent economy, which is detrimental to economic competition. The truth is that the citizens are the ultimate beneficiaries of a competitive market environment," he added.

He also called for a level playing field for all operators, including the NNPC, as this would put an end to the perennial problem of fuel scarcity in the country and the attendant hardships suffered by Nigerians. This would also attract more investment, generate more jobs, and reduce the pressure on the country's foreign reserves.

He emphasised the need for the nation's refineries to be operated as commercial business entities. "The NLNG model, which allows for private sector management should be adopted for the refineries. The management should be private sector led. This would improve efficiency and reduce the drain on the nations' treasury. The pipelines should the concessioned for a more efficient management and reduction of road haulage for fuel," he added.


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