N165/Litre Fuel: Depot Owners Dismiss FG’s Order

EXPLAINER: How Fuel Subsidies Work

Oil marketers on Sunday laid forth requirements for the Federal Government to meet to keep the pump price of Premium Motor Spirit, often known as petrol, at N165 per litre.

According to them, the item must be sold at the permitted ex-depot price at various depots, whether private or government-owned, for filling stations to distributing it at the regulated N165/litre rate. They said that despite the various obstacles in the downstream oil business, private depots were dispensing the product at greater rates than those permitted by the federal government.

They informed the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) in Abuja, prompting the agency to request that marketers report depots selling PMS at prices higher than the allowed price. Although the regulated ex-depot price of fuel is around N148/litre, traders claim that private depot owners sell the commodity for more than N160/litre.

Kimchi Apollo, the NMDPRA’s General Manager, Corporate Communications Department, said in a statement published in Abuja on Sunday that officials from the South-West Independent Petroleum Marketers Association of Nigeria (IPMAN) paid a courtesy visit to the authority and made their demands known.

According to the statement, the goal of the visit was to seek collaboration and support for the authority following the IPMAN South-West Zonal Chairman, Dele Lamidi.

Lamidi, on the other hand, emphasized some of the issues his members were facing, such as product sharing, increased fines, difficulties obtaining tax clearance, and the high expense of doing business across the nation, among others.

He noted that, despite all of the issues the organization was facing, it had determined not to engage in any kind of industrial action as a means of dispute resolution, but added that the fuel price would be N165/litre if retailers were able to obtain it at the authorized ex-depot cost.

“As far as we are concerned in the South-West, we have gone beyond the strike,” an IPMAN official was reported as saying. 

The strike is not a solution to any problem since it affects both the general public and our businesses.

“We will work together to ensure free flow of petroleum products and also make sure that products are sold at the government-regulated price if we get them at the normal price.”

The Deputy National President of IPMAN, Zarma Mustapha, argued that selling fuel at N165/litre was unsustainable given the rise in crude oil costs and the naira’s depreciation versus the dollar. He stated that many independent merchants who sold at the N165/litre pricing had gone out of business over time since the price was not sustainable and was destroying our companies.

“With the existing industry conditions, it is not viable to offer PMS for N165/litre.” 

“I want to tell you something: there is no location in the world where petrol is sold at the price we are selling it in Nigeria,” Zarma said.

Asked to state the rate at which the private depot owners were selling the product, he replied, “As of today they sell as high as N162 to N163 depending on the private depot.

“Now, tell me, as filling owner, if you buy at this price from the private depots, would you sell at N165/litre amidst all the challenges that are currently besetting the oil sector? So it is not possible to sell at N165/litre. This is the reason for the proposal that the approved price be raised to N180/litre.”

Depot owners shun FG directive

Meanwhile, oil marketers are pushing for compensation from the Federal Government if petrol will remain at N165 per litre. One of the sources with the MOMAN hinted that the meeting with the NMDPRA was about how to resolve product shortages in the country.

“The meeting was on how the scarcity would be resolved. They spoke their minds; we also explained what our current challenges are. Our challenges are high costs of operation which were caused by increasing diesel prices, and the issue of forex- we are finding it difficult to operate because costs are rising. And if care is not taken, our businesses will pack up,” our source lamented.

The MOMAN source who chose to speak on condition of anonymity due to the sensitivity of the matter said for petrol price to remain at N165, the Federal Government must compensate marketers.

“When transporters complained that they were running at a loss due to high diesel prices, the government quickly made some money available to them. We are also saying that costs to operate stations and depots are now very high, and it will be impossible to keep prices at N165 for too long. Government should intervene because we are running at a deficit. IPMAN also recently said they can’t keep prices at N165/litre because of operating costs. So if they don’t want us to increase the price, they should find other ways to compensate us,” he said.

When asked if marketers were seeking a fresh subsidy payment; he interjected, saying “we are not asking for a particular thing, however, since they want us to keep the price at N165/litre, they should look for a way to compensate us.”

The DAPPMAN source also hinted that some of the Nigerian Port Authority, and the Nigerian Maritime Administration and Safety Agency invoices to marketers were still being issued in dollars.

“And we have to look for forex most times at black markets to make payments. We complained about it to the Federal Government. Federal Government said they’d instructed the minister to make changes, however, the minister refused to instruct the NPA to allow us to start paying in naira. Our landing costs at the depot are N157, and you expect me to sell at N148 to marketers. Who will pay the difference?”

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