N165/ litre fuel price unrealistic, killing filling stations – IPMAN Deputy President, Mustapha
The Deputy National President, Independent Petroleum Marketers Association of Nigeria, Zarma Mustapha, speaks with OKECHUKWU NNODIM about the current oil sector crisis and how filling stations are battling to survive
Could you please explain why there are long queues in filling stations across the country again?
It's related to the energy Dunkirk that we found ourselves within the last four months due to the Ukraine Russia war, which has made the global prices of crude oil to increase vastly and Russia being the largest producer of diesel in the world has made it tough for people to have access to the purchase of diesel.
For Nigeria, we know well that our refineries aren't working and solely depend on imported diesel. So grounded on that, the drought of diesel has come worse, which is the major product we use in transporting Premium Motor Spirit, popularly called petrol, to our colorful retail outlets across the country
Grounded on that, the government has found itself in a veritably delicate situation.
Still, marketers have been engaging the government since this extremity started, trying to see how stylish we can be able to buffer the effects of the rise in diesel price. Unfortunately, the price has continued to rise because the cost of crude has also been adding .
What measures were taken by the government after your tried engagements?
Grounded on the rise in diesel price, the government saw the reason for an upward review of the transportation cost of bridging claims. Now bridging is different from the original loadings that we generally do and the transportation of PMS to retail outlets that aren't over to 450kms down from place of purchase. Filling stations in this order are assumed as self- sustaining.
still, anything above 450 km and over is categorised under bridging and the transporters are paid bridging claims. nonetheless, the rise in diesel price has affected both the original transportation rate and the bridging rate.
Now, the price of the PMS has remained the same, N165/ litre, and at that pump price our perimeters are eroded going by the cost of transporting the product to retail outlets. Grounded on that, marketers can not be suitable to bridge or pay for original transportation of products, recover their cost and get an perceptible periphery.
It is, still, important to state that the government has been paying the bridging rate for transporting the PMS to various corridor of the country, but the bridging rate was actually fixed when diesel price was around N200 to N250/ litre. moment diesel is N800 to N850/ litre.
In between the last three to four months, we engaged the authority responsible for doing the dynamics of the bridging, that's the Nigeria Midstream and Downstream Petroleum Regulatory Authority. They've been able to first increase the bridging rate by 25 in the month of May and latterly on they gave an increase of N10 round figure to all destinations. This was achieved in May and it took effect on June 1, 2022.
Indeed with that, it isn't enough to cover the cost. That's why I said the oil industry is in extremity presently.
What would you say about enterprises in some diggings that the country doesn't have enough petroleum products presently?
The management of Nigerian National Petroleum Company Limited is doing all it can to make sure the product is available across the country. As I'm talking to you, utmost of the depots in Lagos have enough products as at the first and second weeks of this month( June). They've enough volumes but the difficulty of transporting the products to the retail outlets is the major interference now to the smooth inflow and distribution of petroleum products across the retail outlets in Nigeria.
Meanwhile, we aren't sitting down as we're still engaging the government to see how stylish we can be suitable to get ourselves together and to continue furnishing services to consumers nationwide.
There was a offer that petrol be increased to N180/ litre. Do you also see this as a result to the current extremity?
First, the private depot possessors who are the bones
the Pipelines Products Marketing Company gives the products to, and the independent marketers purchase from them; if they( PDOs) can be suitable to vend the product at the approved government price of N148 to N150/ litre to retail outlets, also filling stations would strive to maintain the approved N165/ litre pump price.
Right now, utmost of the depots vend above the approved government price. We've raised the alarm to the authorities concerned to make the private depot possessors to vend the products as agreed with the PPMC, so that we can be suitable to get the product at the approved price and vend it at a may be lower rate, but not below N170 to N180/ litre. This is because you can not recover your cost at N165/ litre, it isn't realistic presently.
Numerous independent marketers who were selling at this price have closed shop over time because it isn't sustainable and is killing our businesses. With the current dynamics going on in the industry, it isn't realistic to vend PMS at N165/ litre.
I want to tell you one thing, in the whole world there's no place that petrol is being vended at the price we're selling it in Nigeria. The cost of petrol in Nigeria is the cheapest in the whole world as a result of subsidy. The subsidy isn't small, it's so great. Diesel is going for about N850/ litre presently because there's no subsidy on it. This means that petrol price should be nearly the same price if not for subsidy. But if we've refining capacity, the government would have set up a way of softening the effect of that rise.
Still, since we don’t have refining capacity and we use the United States dollar to buy products abroad, we will have no control over the price.
So at what rate are the private depot possessors vending PMS?
As of moment, they vend as high as N162 to N163 depending on the private depot. Now, tell me, as a filling proprietor, if you buy at this price from the private depots, would you vend at N165/ litre amidst all the challenges I explained before that are presently besetting the oil sector? So it isn't possible to vend at N165/ litre. This is the reason for the offer that the approved price be raised to N180/ litre.
still, I want to use this occasion to commend the management of NNPC, because they've enough stock in the private depots and they also have stock that can last for more than a month now on the high seas on bigger vessels that generally bring in the products into the country. I'll also call on the NNPC management to do everything possible to see that our colorful depots across the country are repaired and put to use.
The major thing that will break this ‘ on and off ’ failure situation in Nigeria is when we've enough refining capacity that will meet the petroleum products demand.
However, depending on importation alone has a lot of weight on our economy and the smooth inflow of supply is going to be hindered from time to time, If not.
still, I supplicate that this,000 barrels per day refinery of Dangote that's anticipated to come up in the last quarter of this year ultimately comes up. I believe that if it comes up it'll boost the supply side seriously and bring down the burden which importation has brought on our economy. The Port Harcourt refinery is being rehabilitated and might come on stream in the first quarter of 2023.
When you said the NNPC should fix its depots, does it mean that the oil establishment’s depots arenon-functional?
The PPMC, a attachment of the NNPC, has its own depots and it's about 21 across the country. Some of them include the Satellite Depot in Ejigbo, Mosimi, Ore, Ibadan, Ilorin, Suleja, Minna, Kaduna, Kano, Gusau, Maiduguri, Jos, Gombe, Yola and Makurdi, among others. utmost of the depots aren't performing. They generally bring in the products and vend them to private depot owners.