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According to The Nation, the President Muhammadu Buhari-led Federal
Government may increase the price of Premium Motor Spirit (PMS),
popularly called petrol to a minimum price of N180 and above anytime
soon.
Minister of State for Petroleum Resources, Dr. Ibe Kachikwu who
dropped the hint in Abuja on Thursday, said the current price of N145
per litre can no longer be sustained.
In a presentation he made to a joint committee on Petroleum
(Downstream) of the Senate and the House of Representatives, the
Minister said the landing cost for petrol stood at N171 per litre.
According to him, the Federal Government, through the Nigerian
National Petroleum Corporation (NNPC) has been bearing the cost of N26
per litre, representing the difference between N171 and the current
official price of N145 per litre.
Insisting that independent marketers would not be able to import
the product at the current foreign exchange rate, saying the marketers
were able to sell for N145 per litre when the exchange rate was N285 per
Dollar. The Naira presently exchanges for N365 per Dollar.
“We now have to go back and find the solution to this problem
in order to ease supply gaps and ensure availability of the product at
all times,” the Minister said.
Kachikwu, however, proffered three alternative solutions to pump
price increase: getting the Central Bank of Nigeria (CBN) to introduce a
modulated foreign exchange rate specifically for importers of the
product; giving the marketers significant tax adjustments to enable them
to absorb the high cost; and a plural pricing system whereby the NNPC
would continue to sell at N145 through its numerous outlets while the
marketers are allowed to fix their own price.
The Minister identified causes of the last fuel scarcity to include
diversion of products, logistic constraints, bottleneck associated with
clearance, bad road network, insufficient product reserves, smuggling
through land borders, supply gaps and enforcement challenges.
He stated that the marketers stopped importing fuel since October
2017, as a result of their inability to access foreign exchange from the
CBN, leaving only the NNPC to import the product, which has left a wide
gap between demand and supply.
Dr. Kachikwu lamented that the price of petrol rises with the rise
in the price of crude oil in the international, stressing that in such
instances, Nigeria spends more to import refined products. In effect,
any rise in crude oil price increases the amount the country spends on
the importation of fuel.
To address the situation, the Minister canvassed the opening up of
production lines, specifically the refineries, which he said, would
address supply gaps that usually leads to incessant scarcity.
“Rising prices in international market affecting domestic
prices. What the country needs is to have the refineries working. It’s a
shame that after 40 years, Nigeria cannot produce its domestic
consumption.
“It would take 18 months to address problems of scarcity, price
stability and other issues relating to the supply of petroleum
products. The pipelines should be concessioned to allow private
participation.
“There is huge infrastructure deficit in the system because the
NNPC ought to be distributing products through their pipes but most of
the pipes are damaged. The has necessitated the use of trucks to
distribute the product across the country.
“Most importantly, fixing the refineries should be the lasting
solution. To discuss and address the issues, we have to seek approval
from the President,” the Minister said.
In his own submission at the hearing, the Group Managing Director
of the NNPC, Dr. Maikanti Baru said the last scarcity was caused by
rumours of price increase in the media that led marketers into hoarding
the product in anticipation of higher prices.
Said he: “So there was a frenzy in the movement of products to
the hinterland and diversion of products going to the hinterland in
anticipation of the increase in price.
“The NNPC, or the Petroleum Products Pricing and Regulatory Authority (PPPRA) had no mandate to increase pump price.”
The GMD said that the strike action embarked upon by PENGASAN in
December was partly responsible for the scarcity, saying issues raised
by the association for going on strike had nothing to do with the NNPC.
According to him, the strike triggered panic buying by members of
the public leading to scarcity of the product. He added that although
PENGASAN called off the strike on December 18, the damage had already
been done.
Baru identified other factors responsible for the last scarcity to
be the higher price at which petrol is sold in neighbouring African
countries, citing Cameroun where he said petrol sells for N300-N400 per
litre.
Stating that the NNPC has enough product to bridge supply gaps,
Baru insisted the corporation has sufficient stock to go round even
without importation.
The GMD alleged that about 4500 distribution trucks failed to
return to depots to complete their distribution formalities during the
scarcity period, meaning that the trucks were diverted.
“There was no supply gap because we have Direct Sale Direct
Purchase (DSDP) agreement with 10 consortia involved. Three of them
rejected their cargoes, which were reallocated to others.”
The GMD also hinted that the refineries in Kaduna and Port Harcourt
were being reactivated and restreamed and that they have been producing
three million litres daily.
Baru also cited disagreements among the various private operators
in the sector as part of the problems that threw up the scarcity, adding
that the marketers were busy trading allegations of sharp practices.
He said: “For instance, IPMAN said MOMAN and DAPPMA were
charging over N133.28/litre but when we asked them to provide evidence
of overcharging, they could not provide any. If proven, NNPC would have
withdrawn the licenses of the errant bodies.”
The Executive Secretary of the Department of Petroleum Resources
(DPR), Mordecai Baba Ladan told the committee that at the outset of
scarcity, the DPR rolled out its machinery across the country, with the
directive from the Minister that defaulters be dealt with.
“Almost every marketer/filling station across the country are
defaulters. And if all defaulting filing stations were to be shut down,
there may not be anyone left.
“They horde, sell above official price and also divert
products. But we have stepped up our monitoring process now that the
NNPC is the sole importer but the corporation cannot do it alone.
Virtually all the independent marketers that attended the hearing
alleged multiple charges by the Nigerian Port Authority (NPA), NIMASA
and some state governments charging 3 kobo per litre wharf landing fee.
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