The Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN) has asked 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 Premium Motor Spirit (PMS) across the nation.
The chairman of DAPPMAN, Mrs. Winifred Akpani, made this appeal during a press parley held in Lagos on Tuesday, stating that the burden of sourcing FX through the parallel market for transactions domiciled in Nigeria had left petroleum marketers in “dire straits”.
She said, “Accessing USD 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.”
Akpani noted that in addition to core operational expenses that are denominated in USD, petroleum marketers also contend with sourcing funds from the parallel market to pay for fees and levies, some unauthorised, that are also charged in USD.
“For example, to charter a vessel to convey 20,000 MT of PMS within Nigeria for 10 days, freight charges are denominated in USD, that comes to about N220 million at official FX rate of N440 and a whooping N440 million for petroleum marketers who have to source FX 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 FX rates and N30.8 million for petroleum marketers who source from the parallel market.
In addition, Jetty Berth is charged in USD and comes to N2.2m at official FX rate and N4.4 million at parallel market rate, while Port dues, charged in USD by the Nigerian Ports Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA), which are charged in USD, come to N71.51 million at official FX rate and N142.796 million for marketers who source FX 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 FX at the CBN exchange rate for their operations. This is a passionate appeal to the government as we can confidently state that accessing FX 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 DAPPMAN Boss asserted that the Nigerian National Petroleum Company (NNPC) Limited, 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 USD at CBN’s official rates, saying that the NNPC also has access to products through swap arrangements.
Akpani decried the absence of a level-playing field that guarantees access to USD 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, defense, 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 lauded 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.
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Fuel marketer berates FG’s costing template, says realistic cost of petrol is N200 per litre
AN independent petroleum products marketer, Mr Mike Osatuyi, says the only realistic pump price of petrol is between N200 and N210 per litre.
He said on Tuesday in Lagos that Federal Government’s pricing template that fixed pump price at N169 per litre of petrol is grossly unrealistic when landing cost of the fuel at the station is N194 per litre.
“I buy petrol at N186.50k per litre from the depot and it costs me about N9.50k to get the same litre to the pump after paying levies.
“How do you want me to sell at N169 per litre when I have incurred additional costs?’’ he queried when he spoke with the News Agency of Nigeria (NAN).
“No marketer can sell petrol at the regulated price of N169 per litre with the current realities when landing cost is N194 per litre.
“Those saddled with the responsibility of petroleum importation and pricing should be held responsible for the price disparities at the fuel stations.
“The current price of petrol does not reflect inflation, Foreign Exchange costs, union dues and transportation,’’ Osatuyi, National Operations Controller of the Independent Petroleum Marketers Association of Nigeria (IPMAN), said.
He stressed that government’s pricing template did not address current realities and pricing indices.
“We should have a current template that will reflect current realities in petrol business pending the time that government would deregulate the sector fully.
“There are some cost fundamentals, additional charges, and levies that are not factored into the template currently in use,’’ he noted.
Osatuyi told NAN that government should open up on petrol landing costs and the realistic price at the pumps.
He stressed that a total deregulation of the downstream sector of the petroleum industry remained the best option.
According to him, total deregulation remains the solution to address challenges in the downstream sector of the petroleum industry as it will allow interested investors to import freely.
“Total deregulation remains the best solution to ending fuel scarcity.
“The cost implication of total deregulation will make the price of petrol too expensive for Nigerians, but it will shift the burden from the government to end users,’’ he said.
A NAN correspondent who monitored fuel stations in Lagos reports that majority of fuel stations belonging to independent marketers sold petrol at between N180 and N200 per litre.
Major marketers selling at the official pump price of N169 per litre had long queues, the correspondent reported. (NAN)
