The Nigerian National Petroleum Company Limited (NNPCL) may cease petrol imports as depot prices near N1,000 per liter. Explore the potential implications for fuel availability and pricing in Nigeria.
There is a possibility that the retail cost of Premium Motor Spirit (commonly referred to as petrol) at gas stations will surpass N1,000 per liter due to recent hikes in pricing for this commodity within select private depots. The current rate hovers between N920 and N950 per liter.
On Monday, protesters took to the streets of Abuja and demanded that Mele Kyari, Group Managing Director of Nigerian National Petroleum Corporation Limited be immediately dismissed due to continued fuel shortages in Nigeria.
According to reports, the NNPC had notified oil marketers about the financial burden associated with importing petrol.
The possibility of NNPC halting the importation of petrol has caused worry among dealers, who have expressed their concerns.
Earlier, Olufemi Soneye, who speaks for NNPC, stated that the national oil corporation was experiencing financial pressure. As Nigeria’s exclusive importer of PMS, NNPC manages subsidies on this commodity which amount to several trillions of naira.
Due to the costs of PMS supply, NNPC Ltd is experiencing financial difficulties that affect the sustainability of its supply. The company has recognized reports in national newspapers about owing substantial debts to petrol suppliers which further intensify their constraints. As a result, this situation brings immense pressure on NNPC Ltd and puts fuel’s sustenance at risk.
“Soneye stated on Sunday that NNPC Ltd reaffirms its commitment to act as the supplier of last resort in compliance with the Petroleum Industry Act, and ensuring national energy security. The company is proactively partnering with pertinent government agencies and other related parties to ensure a consistent distribution of petroleum products throughout the nation.”
According to marketers, representatives of the oil company have notified gasoline retailers about this development with a warning that it could potentially result in an increase in petrol prices at fuel stations within upcoming weeks.
According to Ukadike Chinedu, the National Publicity Secretary of Independent Petroleum Marketers Association of Nigeria, NNPC Trading is currently the sole importer of petrol and has openly admitted that they can no longer continue due to unsustainable costs. This implies that they have been subsidizing the product all along.
It is possible that the price of petrol may continue to increase in upcoming weeks due to insufficient supply. Therefore, immediate and significant action must be taken to address this issue.
Despite the Nigerian Upstream and Downstream Petroleum Regulatory Authority’s requirement for depots to sell PMS at a fixed price, private depots were found selling petrol for prices varying between N920 to N950/litre.
Last week, George Ene-Ita from the NMDPRA contended that there were discrepancies in petrol price reports received by the regulator from officials at various depots.
He stated that the prices published at the depots by our depot personnel every day differ from N850/litre as they are instructed to do so. Our field agents present at these locations provide us with an alternate value.
The NMDPRA official stated that independent marketers running certain filling stations in Lagos and various other states were selling their products for exorbitant amounts of N900 to N1,000/litre. He further declared that any such outlets caught would be penalized by the authorities.
Ene-Ita stated that if they acquire these outlets, their primary goal is to close them down. This is because NNPC has the sole responsibility of distributing products and determining ex-depot prices for off-takers. They collaborate with stakeholders to work out margins, which shouldn’t be unreasonably high.
According to the NMDPRA spokesperson, it is impossible for the agency to reconcile with independent marketers over their expensive petrol prices.
He cautioned, “Upon acquiring these outlets, our intention is to close them down due to the exorbitant pump prices. NNPC informs us of their selling rates and it’s unreasonable for the prices at pumps to surpass N650/litre.”
Despite this, our reporters found that numerous petrol stations run by independent marketers were selling fuel at nearly N1,000 per litre on Monday. In certain filling stations in Kaduna, it was being sold for as high as N1,300/litre.
Hammed Fashola, the National Vice Chairman of IPMAN, expressed his disagreement with NMDPRA and claimed that they lacked honesty in their actions.
While perusing the latest news, I stumbled upon a report stating that no depots were charging exorbitant prices according to NMDPRA. However, considering their lack of transparency and authority on the matter at hand, it is debatable whether they should be releasing such statements with confidence. After all, given that the agency has its officials stationed in each depot for oversight purposes, it would seem improbable for them not to have knowledge about what truly goes down within these establishments.
He stated that the price at filling stations is higher due to the fact that private depots sell their product to them at elevated rates, and when transportation costs and other expenses are included, it further increases.
According to Fashola, IPMAN’s lack of direct access to fuel imports from the NNPC – the sole importer – is responsible for price discrepancies between them and larger marketers.
He states that the supply shortage persists, resulting in an implementation of the law of demand and supply. The increased demand for the product has led to a surge in its price.
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According to him, numerous private depots currently offer petrol for sale at N920/litre with some selling it at a higher rate of N950/litre.
He explained that the reason why independent marketers, who possess approximately 80 percent of Nigeria’s filling stations, charge higher prices than major marketers.
Fashola declared that at present, depots are offering petrol for N920 and N950/litre, respectively. This is the reality we confront which directly factors into why fuel prices have climbed at gas stations.
Fashola had urged the government to either eliminate or reinstate the fuel subsidy rather than opting for partial deregulation.
It would be best if the Federal Government and NNPC deregulate completely rather than dragging it out. The difference in prices between NNPC retail at N580 in Lagos and independent marketers selling at N900 or N800 shows that we know where this is headed.
Fashola stated that the evident gap was detrimental to their business as it hindered any progress and ultimately had a crippling effect.
According to the IPMAN representative, several depot proprietors encountered numerous obstacles acquiring fuel from NNPC.
Due to forex limitations, only the NNPC has the ability to supply this product. Other independent marketers attempted importing it in small quantities but were unsuccessful.
“If you are acquainted with some of the depot owners we refer to, they may share their experiences with you. When NNPC delivers its product, it does not directly distribute it to them; instead, they have to hire daughter vessels and pay fees in dollars. Thus, one cannot entirely fault these individuals for such circumstances as this is an actuality that the depot owners themselves bear extra costs,” he stated.
While this was happening, numerous protesters were holding banners demanding the immediate removal of Kyari, head of NNPC.
The demonstration occurred subsequent to NNPC’s acknowledgment of the perilous status of its sizeable debt owed to suppliers, which posed a threat towards sustaining fuel distribution.
The protesters sang songs of solidarity and held up numerous banners bearing messages such as “We are weary of ongoing fuel shortages and excuses regarding refinery functionality,” “No sense of direction under Kyari,” and “Our demand is for transparency in NNPCL’s operations.” They expressed their dismay over Kyari’s lackluster performance, stating that it left them with even more unanswered questions.
