Though
attempts have been made to assure Nigerians that there are no plans to
increase the pump price of Premium Motor Spirit, popularly referred to
as petrol, The PUNCH has gathered that the actual price at which the
product should sell at filling stations is N151.87 per litre.
This “realistic” price is more than the maximum N145 per litre fixed
by the Federal Government on May 11, 2016 when it liberalised the
downstream oil sector, marketers with knowledge of the market and the
pricing mechanism told one of our correspondents on Tuesday.
This, they said, was basically due to the continued scarcity of the
United States dollar, adding that the true price of petrol was N151.87
litre, judging by the current ex-depot price of the commodity.
In Tuesday’s exclusive report by The PUNCH on a looming hike in
petrol price, dealers explained that the ex-depot price of the product
was N133.28 per litre and that the marketers were doing their best to
manage the situation.
They stressed that the dollar hit an all-time high last week, as it
exchanged for N400 at the parallel market, and called for urgent steps
to address the situation in order to sell the PMS at the approved rates.
In a move to avert a price increase, it was learnt that the
government conveyed a meeting of stakeholders in the downstream oil
sector on Tuesday, which was held at the headquarters of the Petroleum
Products Pricing Regulatory Agency in Abuja.
One of our correspondents gathered that participants at the meeting
included officials of the Nigerian National Petroleum Corporation,
Ministry of Petroleum Resources, the PPPRA, Major Oil Marketers
Association of Nigeria, Independent Petroleum Marketers Association of
Nigeria, Depot and Petroleum Products Marketers Association, Nigeria
Association of Road Transport Owners, as well as other concerned
persons.
Explaining that the actual cost of the PMS had increased beyond the
N145 per litre fixed rate, an oil dealer who attended the meeting stated
that when the distribution margin for petrol was added to the ex-depot
price, the real cost of the commodity was N151.87 per litre.
The official, who spoke on condition of anonymity because of the
sensitive nature of the subject, said, “Since the ex-depot price is
around N133.5 per litre and the selling price is N145 litre, when you
remove the ex-depot cost from the selling price, you’ll get about N12.
Now, from this N12, consider the distribution margin and other costs
from the depot; if all these costs are less than N12, then the marketers
are making profits and there will be no complaint.
“But if the reverse is the case, then they have a complaint. I want
you to find out what is the marketers’ margin, transporters’ margin,
bridging fund, Petroleum Equalisation Fund, administrative charges and
more. When you add all these together, you will realise that truly, the
marketers are doing all they can to hold the pump price at the N145 per
litre band.”
Investigations by our correspondents from the PPPRA showed that when
the various costs highlighted by the oil dealer were added together, the
result was a margin of N18.71. By adding this to the N133.5 ex-depot
price, the final figure is N151.87.
For specifics on the distribution margin for every litre of petrol
consumed across the country, retailers charge N6; transporters’
allowance is N3.36; bridging fund, N6.2; dealers’ charge, N2.36; marine
transport average, N0.15; and admin charge, N0.3; making a total of
N18.71.
When asked to state how the marketers had been coping and who is
paying the extra considering the fact that some stations were even
dispensing petrol at rates lower than N145 per litre, another dealer
said, “We met with the government and we made it clear to them that the
situation is precarious. The competition has made many of us do things
that may be considered unusual in some sense, all in a bid to stay
afloat.
“But for how long can this be sustained? The competition has made the
marketers to come up with ingenious ways to source forex, which is why
some stations still sell below the N145 per litre price in order to
attract customers and make turnover in bulk. But the truth is that this
is unhealthy and cannot be sustained.”
On the meeting between government officials and the marketers, a
senior official of the Petroleum Resources ministry stated that the
government might either subsidise the product again or consider some
form of concession to the marketers with respect to the cost of the
dollar.
The official said, “The issue of forex has been a challenge to both
the government and the oil marketers. All of a sudden, the dollar
skyrocketed to about N400 and the product we are concerned with here is
an international product. So, if they are bringing in the product by
buying dollar at N350, then it is obvious that they are really working
hard to remain in business.
“For if we are in a truly deregulated market environment, then the
price of the product should have increased beyond N145 per litre; there
is no doubt about that. Meanwhile, there was a highly confidential
meeting between the management of the PPPRA and stakeholders in the
sector on this matter.
“I may not be able to tell you the resolutions that were reached
concerning the issue of pricing of petroleum products, but the body
language of those who participated in the meeting suggests that the
government may be considering some form of concessions to the oil
marketers as it did for the Muslim pilgrims. We all know that the
government cannot afford to increase petrol price again, not at this
time.”
The Group Managing Director, NNPC, Maikanti Baru, told journalists in
Abuja on Tuesday that he had not received any directive to increase
petrol price.
He explained that the corporation had enough stock and that all was being done to meet the forex needs of the marketers.
However, the Nigeria Union of Petroleum and Natural Gas Workers and
the Trade Union Congress of Nigeria have described the news of a looming
increase in the pump price of petrol as unwelcome and worrisome.
The Chairman, NUPENG, Lagos Zone, Alhaji Tokunbo Korodo, said, “It is
a bad idea to say petrol price will increase again. Nigerians will not
welcome any further increase. Truly, we saw the foreign exchange
crumbling on daily basis, but it shouldn’t be an excuse.”
He said if the government could subsidise forex for pilgrims, it
should also be prepared to subsidise whatever increase that would come
from any crisis the marketers might be having concerning the fuel price.
Korodo said, “Government should not take us for a ride because nobody is going to take it the way the marketers are thinking.
“Marketers are telling us what the government is planning to do,
because on their own, they cannot just increase the price. They are only
playing the script of the government and we are not going to succumb to
such blackmail.”
The Chairman, TUC, Rivers State Chapter, Mr. Chika Onuegbu, said the
government had made it clear that1 the price of petrol would not be more
than N145 per litre.
He said, “And even at that point when the government made the
agreement, we knew that it was making excess profits and it admitted to
that fact. So, the government should be able to cushion the impact of
the forex challenge marketers are facing.
“I think the government had an understanding with the marketers
regarding the exchange rate that they will apply for importing their
products.”
Onuegbu said it would be unfair to Nigerians for the price to be
increased, adding, “We were told that at N145, things would be easy for
the marketers.
“When they (marketers) were making super profits, they didn’t tell
anybody. That was why as soon the price was increased, there was fuel in
every filling station. The problem now is that they are not making as
much profit as they used to make; therefore, they must punish
Nigerians.”