Fuel price hike’ divides stakeholders’

[Edoman]

Fuel price hike’ divides stakeholders’
March 12, 2021

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Key players in the downstream oil sector have been singing discordant tunes over fuel price hike in the country. While the Federal Government which is the sole importer of the product has said it has neither increased the pump price of the product nor its ex-depot price, marketers continue to fleece the citizens, writes LUCAS AJANAKU.

The controversy over the recent sudden resurgence of long queues in petrol stations in major cities across the country and consequent increase of the pump price of petrol has continued to elicit curiosity among motorists and commuters in the country.

The reasons for this are not far-fetched. Like petroleum, petrol is the jugular vein of the nation’s economy. Its pump price ultimately determines the prices of other goods and services in the country because of the cost of freighting and commuting both intra and inter-city.

Nigerian National Petroleum Corporation (NNPC) and Independent Petroleum Marketers Association of Nigeria (IPMAN) Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) and Major Oil Marketers Association of Nigeria (MOMAN) appear not to be on the same page on the reasons for the hike in the pump price of petrol.

While the government fixed the price band of fuel at between N160 and N165, the product is currently being dispensed at between N165 and N172 in some filling stations in the country.

MOMAN said the price hike was baseless because every marketer sources for the product from the NNPC. Its Chairman, Mr Tunji Oyebanji, said none of his members had hiked the price of fuel, saying all marketers currently source product from the NNPC.

Oyebanji however, said since the Federal Government said it has deregulated the downstream oil sector, marketers were at liberty to sell at any price to reflect their operational cost.

He said if the unilateral fuel price hike had come from some of his members, the government would have wielded the big stick, arguing that smaller operators had a way of getting away with infractions.

He said the desire of the Federal Government was to deregulate the downstream oil sector, adding that if that had taken place, the price would have gone up astronomically, adding that this had necessitated the parley with labour.

IPMAN accused DPPMAN of jerking up the ex-depot price of petrol from N158 to N165. Its Vice President, Alhaji Abubakar Maigandi explained that his members source fuel supply from DAPPMAN and the NNPC.

The NNPC has to make use of the storage facilities of private business owners because of the huge volume of product that are daily needed to run the engine of the national economy.

Maigandi said the price differential is a function of the distortion brought about by the increase in the ex-depot price of the product by N7 by members of DAPPMAN.

An oil marketer accused DAPPMAN of dabbling into the business of retail sale of petrol. He said it amounted to breach of trust and has been responsible for the problem in the downstream oil sector.

He said: “DAPPMAN members who we are supposed to get petrol from their depots are now building filling stations competing with us. Is it supposed to be like that? Will that not give them a competitive egde over us?”

Asked why the marketers are not patronising the NNPC depots where the price is still official, he said: “You cannot get the product from NNPC depots. NNPC will ask you to queue up at the depot.”

Way forward

All the stakeholders in the downstream oil sector believe the way to go is complete deregulation.

Maigandi said the government must muster the political will to take the bull by its horns. He said jobs will be created if the market is deregulated. He believes the requisite local and foreign investments are not coming to the downstream oil sector because there is policy inconsistency. According to him, when the Federal Government makes a policy statement, labour will kick and derail the programme. This, he said, makes the country to be less attractive to investors.

Reminded that a completely deregulated downstream sector will see consistent rise in petrol price, especially now that Brent oil will hit $70 a barrel in the second quarter (Q2) and $75 in the following three months., he said rather than leading to an increase, it will lead to more cash availability to the Federal Government bolstered by the diversification policy which has led to significant rise in earnings from non oil sector.

He said the price of petrol is rising because the value of the local currency, the naira is in distress. Maigandi said if the market is deregulated, his proposed Garima Refinery and Petrochemical Plant will come into fruition as he will only need to get across to his partners in Germany.

Oyabanji agrees no less with him. He said when the market is fully deregulated, the interaction between the forces of demand and supply will determine the market price.

The Federal Government said the billions of naira it spends yearly to subsidise domestic consumption of fuel would be freed up to take care of other sectors of the economy such as provision of health services and others.

Call for sanction

Group General Manager, Group Public Affairs, NNPC, Dr Kenny Obateru, insisted that neither the ex-depot price nor the retail price of petrol has been increased.

“Our position is that NNPC has not increased its ex-depot price. We are not in charge of regulation, hence, the responsibility for price enforcement lies with the regulatory authorities.”

The position of Dr Obateru on regulation and enforcement aligns with that of oil marketers too.

They marketers have urged the policeman of the upstream and downstream oil sector, the Department of Petroleum resources (DPR) to intervene by clamping down filling stations selling above government price band.

But IPMAN believes charity must begin at home. The DPR must start enforcing the official prices from DPPMAN. “What we are telling the DPR about closing down of stations that are selling above pump price is that they should start the clampdown from the private depots that are selling above the official price,” IPMAN said.

DPR barks

After turning the other cheek and allowing Nigerians to be fleeced, the DPR , like toothless bull dog, barked during the week.

It said it will not hesitate to apply appropriate sanctions on marketers engaged in hoarding of petroleum products in their outlets.

Its Director, Mr Sarki Auwalu, gave the warning in a statement in Lagos.

Auwalu said the warning was necessitated by the emergence of queues in retail outlets in some states of the federation.

According to him, from available records, there is product sufficiency in the country and there is no need for hoarding by any marketer.

“The DPR will not hesitate to apply appropriate sanctions on any outlet found wanting in this regard. The regulatory agency has set up a special taskforce to intensify surveillance and monitoring of all retail outlets and depots nationwide to check the anomaly.”

Auwalu assured them that the DPR would continue to provide its regulatory focus of quality, quantity, integrity and safety for the effective operations of the downstream sector.