Fuel Price Increase, Scarcity Looms Over Uncertain Market Price

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What appeared like a strategic decision earlier in the year, when the Federal Government opted for deregulation of the downstream petroleum sector and insisted on price modulation for Premium Motor Spirit (PMS) or petrol seems to have been left in limbo, as the price remains uncertain.

Currently, marketers are divided across state or associations as to the most appropriate price for the product, with most selling between N150 and N160 per litre, depending on the state.

Marketers in Abuja sold around N150, while those in Kebbi State sold at N155, with some fuel stations already shutting down.In March this year, the Minister of State for Petroleum Resources, Timipre Sylva, stated the government would modulate the pump monthly using market realities, adding that the move signaled the end of subsidy regime.

Meanwhile, the Petroleum Products Pricing Regulatory Agency (PPPRA), which is responsible for modulating the price, had issued a monthly guideline from March to July, but reportedly failed to provide the guideline for August, leaving some marketers to effect changes indiscriminately.

While projected estimate by The Guardian shows the price may hit N157 per litre, going by moves by the Pipelines and Products Marketing Company (PPMC), a subsidiary of Nigerian National Petroleum Corporation (NNPC), to increase the ex-depot price of the product, the Kano branch of Independent Petroleum Marketers Association of Nigeria (IPMAN) directed members to sell at N150 per litre. This came as PPMC increased the wholesale price to N138.62.

Last month, the approved PPPRA price ranged from N140.80 to N143.80 per litre when the landing cost with wholesale charges stood at N124.84. Should the marketers factor in the N18.97 extra charges for distribution margin, Transporter Allowance (NTA), retailer margin, bridging funds, marine transport average, as well as administration charges, the pump price could settle around N157 per litre before the end of this month.

Oil marketers, under the aegis Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) told The Guardian that the prevailing situation remained an indication that deregulation policy earlier announced by the government was flawed.

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National President of PETROAN, Dr. Billy Gillis-Harry, insisted that prevailing situation is not favourable to the growth of the sector, adding, “The reality is that the price we are proposing for retail outlets to pay is not pocket friendly, I mean the ex-depot price of N138.62. That means we are only going to be paying to PPMC.”

By not providing the price band, Gillis-Harry said PPPRA is being unfair to Nigerians, adding that the confusion would persist.He said: “There is confusion in the system. In Lagos, people want to sell at N153. In Akwa-Ibom, I just read now on our platform that members should sell at N149.50, others are talking about N152 to N153. That is what we have tried to avoid by asking for a roundtable meeting on the deregulation.”

The Resource Centre for Human Rights and Civic Education (CHRICED) said it was disturbed and dismayed by the decision on current price and described the development as exploitation at a time the masses are struggling with economic ravages of COVID-19.

Its Executive Director, Dr. Zikirullahi Ibrahim, said: “Although the government is making a futile attempt to distance itself from the latest hike of PMS price, the Nigerian people are not fools and cannot be deceived.

“The attempt to make it look like the government has no hand in the hike and that it is the independent marketers that are raising prices on their own amounts to playing on the intelligence of citizens.

“Nigerians are not deceived; just like it was recently revealed how so-called legislators cornered contracts for themselves in ministries and agencies of government, it is apparent that the so-called companies importing fuel belong to Politically Exposed Persons (PEPs).

“It is, therefore, clear that the so-called independent marketers are agents of people in government, who have for decades held the country to ransom by foisting fuel importation as the only way to meet the country’s petroleum products needs.” He said it was shameful that over five years since President Muhammadu Buhari ascended the Presidency on the back of his campaign mantra of ‘change,’ Nigeria has continued on the hopeless and unsustainable path of fuel importation.

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An energy expert and lecturer at the University of Ibadan, Adeola Adenikinju, insisted that full liberalisation of the petroleum downstream sector remained the way out.

“Government should liberalise PMS; allow marketers to bring in the products, promote competition, prevent price collusion, regulate quality and allow NNPC to compete and serve as price leader to signal competitive price,” Adenikinju said.Another expert, Michael Faniran, noted that the absence of a clear legislation to deregulate PMS was affected the sector, adding that it remained the responsibility of PPPRA to provide clarity to the market on pump prices, saying: “This was expressed through a PPPRA regulation passed in June 2020 and backdated to March 2020, where PPPRA stated that they would be responsible for publishing guided PMS pump prices.”

Faniran noted that the full deregulation of PMS by law should remain priority of government to enshrine that there would be no more PMS subsidy by government, noting that uncertainty created by the monthly price review by the PPPRA and the challenge of accessing foreign exchange have been identified by marketers as major disincentives to the resumption of importation.

He said: “The government cannot continue fixing the pump price of petrol every month and expect private sector investors to be willing to resume wholesale import or build refineries in the country.”

Author: Kolade OloladeMultiple Award Winning Blogger:: Content Provider :: Graphics Designer :: Social Media Manager :: PR :: Human Resource Enthusiast

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