Tag: petrol
-
Petrol hawker in Abuja
A MAN SUSPECTED TO BE A PETROL HAWKER ON HIS WAY IN SEARCH OF THE COMMODITY AS SCARCITY PERSISTS IN ABUJA ON TUESDAY NAN -
Marketers halt importation as petrol scarcity persists
Fuel queues grew longer in many cities at the weekend — no thanks to thedisagreement over subsidy between the government and marketers.
It was gathered that because marketers have reduced their import, the scarcity may persist.
But the Nigerian National Petroleum Corporation (NNPC) plans to triple its supplies to mitigate the shortfall.
Many filling stations in major cities, including Lagos and Abuja, at the weekend either did not sell the product or sold above the N87 price. Many sold at between N97 and N110 per litre.
There were queues at filling stations. The situation got worse in Abuja yesterday, with many stations under lock and key.
The few that opened to customers were besieged by residents. Queues extended to the roads.
Besides, the petrol stations which operated yesterday only engaged in skeletal services, selling with few pumps.
At 3.00pm in Kubwa, the Nigerian National Petroleum Corporation (NNPC) and Oando stations were shut.
The NIPCO opposite them was overwhelmed by customers.
According to some of the motorists, who were sweating in the scoching sun, they had queued up for petrol as early as 6.00am. It sold petrol for N87.
Oando at Dutse Junction, also on the Kubwa expressway, had a long queue.
There were two queues stretching over a kilometre to the NNPC super mega station on the same expressway.
Group General Manager, Group Public Affairs Division, NNPC, Mr. Ohi Alegbe, at the weekend cautioned the public to desist from panic buying.
In a statement, the corporation said it was working with all downstream industry stakeholders.
The statement said: “ The management of the NNPC has called on members of the public not to engage in panic purchase and hoarding of petroleum products as the Corporation is working with all downstream industry stakeholders to eliminate the noticeable artificially, induced fuel queues in some fuel stations.”
Alegbe added that because of the prevailing situation, the corporation, which has been responsible for 50 per cent of nationwide product supply, has stepped in to address the scarcity by tripling supply from their tank farms in Lagos and other areas in the country, which will be trucked to the hinterland. He told The Nation that the NNPC within 48 hours from Sunday will be able to inject 600, 103.047 metric tonnes of premium motor spirit (petrol) equivalent of 688 million litres into the market.
He urged to consumers to exercise patience and not engage in panic buying as the scarcity will be arrested as from tomorrow.
The initial cause of the scarcity was a reaction to oil marketers’ report that their stock level was down and the replenishment was not feasible because of unpaid subsidies that stood at N264 billion. The signal from the marketers that they would not be able to import fuel compelled some retail outlets to slow down on sale.
However, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, had a meeting with the marketers last week promised that the debt would be fully paid by end of this month. Based on this promise, the marketers agreed to continue with importation of petrol.
However, the National Assembly last week cut the 2015 subsidy budget of N200 billion by half. This action, The Nation learnt, didn’t go down well with the marketers as their fears were heightened that the government may renege on their promise to pay the outstanding debt let alone additional debt. The marketers before now have been showing concern over budgetary allocation of N200 billion for subsidy in 2015, wondering if that may mean a step to full deregulation of the downstream sector.
Although the Executive Secretary of the Major Oil Marketers Association of Nigeria (MOMAN), Mr. Obafemi Olawore and the President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chief Chinedu Okoronkwo, could not be reached yesterday, Olawore confirmed to reporters that there was a drop in MOMAN members’ stock but with the meeting held with the Minister of Finance, they would step up importation.
For IPMAN, it was learnt that the level of debt owed them is enormous. Theirs is a complex case because The Nation learnt that many of their members have issues with clearance on the imports they made and without the clearance there will be no payment.
Besides, The Nation also gathered that the banks had stopped granting letters of credits (LCs) to IPMAN members, which worsened the supply situation.
At the moment, only the NNPC through its subsidiary, the Pipeline and Products Marketing Company (PPMC), is importing petrol.
-
We traded foodstuff for petrol, says suspect
A suspected pipeline vandal has said he used what he has to get what he wanted.
Irede Ehimusan, a Fisherman, who was paraded along 22 others by the Nigerian Security and Civil Defence Corp (NSCDC) over the weekend, said he exchanged foodstuff for petrol.
Among the suspects were eight Nigerians, seven Ghanaians, three Togolese and others from the Republic of Benin.
The suspects were arrested between January and this month around the high sea by the army, with stolen diesel, petrol and kerosene.
Lagos State NSCDC Commandant Gabriel Abafi said six suspects were arrested with 65 drums of 250-litre diesel; 14, with 254 drums of 250 litres and 20 gallons of 25-litre petrol and three with 59 drums of 250 litres and 11 gallons of 50 litres of kerosene.
He hailed the army for its courage.
Abafi said: “Some were caught on the sea with fuel in sacks, polythene bags and more than two trailers. We shall give the exhibits to the Pipelines and Product Marketing Company (PPMC) to examine and then the court will rule on it.”
One of the suspects, Augustine Adukwe, 37, a boat driver, said he never knew the deal was illegal.
“I was arrested at the shores. I really don’t know my offence. I was caught while collecting some products. I never knew it was illegal because I didn’t damage anything,” he said.
A furious Ehimusan queried the rationale behind their arrest.
“Why should they arrest the poor? Why didn’t they arrest those who brought ship” to buy PMS (petrol)? If not because we had a little misunderstanding with the foreigners on board, we would have left the vicinity. We used what we had to get what we wanted. We gave the foreigners foodstuff in return for petrol. If the food stuff was more than the petrol, we put it on record for adding up on the next sale. That was my second time,” he said.
Francis Olusegun, 42, also said they bought the products from foreign sailors in exchange for foodstuffs.
“I repeatedly told the Navy officials that I wasn’t carrying PMS and I was told if they found out it were diesel, I’d be freed. But now, I am still here,” he said.
-
Petrol price reduction
Perhaps, the reduction in the price of petrol from N97 per litre to N87 is the first time in recent memory the selling price of that commodity would come down in this country. All we have been treated to in the last several years have been constant increases in the name of fuel subsidy removal that pay scant regard to the wellbeing of our toiling people.
So when the Minister of Petroleum Resources, Diezani Alison-Madueke announced government’s reduction of the selling price of petrol penultimate Sunday, it must have struck as a sharp departure from the norm. And reactions to it are bound to follow this mood.
The measure which was dictated by the falling price of fuel in the international oil market has expectedly attracted reactions from segments of the Nigeria population. The Nigerian Labour Congress (NLC) commended the price slash but insisted that it is not deep enough. For drivers and commuters across the country, the reduction would make life a little better for them. There are also those who think the reduction is a design by the PDP government to catch votes in the coming elections.
For the opposition APC, the reduction by just 10.3 per cent is a “mere tokenism” at a time the price of crude oil has crashed by about 60 per cent in the international oil market. It said the selling price should not be more than N70 and that at N87 the government was forcing Nigerians to subsidize the massive corruption in the oil sector.
All these views have their merits and therefore cannot be dismissed with a wave of the hand. Not when it is recalled that since the decline in the price of oil commenced some months back, there have been calls on the government to slash the selling price of petrol in keeping with trends outside our shores. These calls were further reinforced by the fact that all along, the government had hinged fuel price increase on the high cost of the commodity in the international market. It was the same logic that was the raison d’être for previous increases in the price of petroleum products in the name of fuel subsidy removal.
Moreover, the fear of further increase or removal of fuel subsidy as it is generally called was still palpable some months back such that the government had to come public denying such a move.
If by any circumstance, there is a sharp fall in the price of that commodity, it is only rational that it should be followed by a corresponding reduction in its domestic price.
The government did not help matters when it appeared to have shut its eyes to reactions to the development by other oil producing countries. This is especially so when other African countries as Zambia and Tanzania had slashed the price of petrol to 23 and 16 per cent respectively. If the contention is that the reduction did no go that far as it only represented 10.3 per cent of the current price that point cannot be wished away. More so when weighed against the background of the raging poverty in the country and the huge corruption that pervades all spheres of the national economy.
The scandalous corruption in the oil sector denoted by the exposed scandal in fuel subsidy payments is the more reason why the ordinary people should be made to take full advantage of any decline in the international price of crude oil.
We are all witnesses to revelations sometime ago of how unscrupulous marketers ripped the nation dry by receiving payments for fuel not supplied. Much of the companies and individuals that were involved in that scam have their cases before the courts even as the wheel of justice is grinding very slowly.
It is therefore not out of place to demand that the full benefits of the slide in oil price should be availed our toiling people who have over the years, borne the brunt of the misrule of various governments.
It is not a matter that has to do with one government. It has little to do with who is in power now or the efforts to effect regime change through the current electioneering campaigns. This point has to be made and most unambiguously too otherwise we mix issues and get no where with them.
Nigerians need the full benefits of the oil price slash. That could be the little token they get from the oil gift which nature bountifully placed at their backyard. That could form part of their share of the national cake.
Besides, a further reduction in the domestic price of petrol will impact positively in the prices of goods and services that are largely patronized by the poor. It will not only force down the price of transportation but that of goods and services largely patronized by the poor.
Being a populist policy, it is not surprising why it has been dubbed a vote catching strategy. But it is immaterial whatever capital the government of the day may wish to make out of the measure. Even if the target is to lure the larger public to the side of the government given the coming elections, what is important is that ordinary people will still be better with the reduction. That is a better way to look at the matter. We should align with those who want a further reduction rather than dissipate energy on whatever benefits the government may get from it.
Even then, the rational for the reduction is hinged on events in the international oil market and this should be clear to everybody. It has not even gone that deep to correspond with the fall in oil price in the international market. So the issue of scoring political points through the reduction should be out of it. It is an economic decision that is universal to oil producing countries. If the current regime gains any political edge from it, so be it. Such should neither detract from the current reality in the oil market nor blur our understanding of the dynamics of international oil pricing.
It is hoped that it is not being suggested that measures that will improve the lives of our people should be denied them just because someone somewhere may take political advantage of them. That will amount to carrying such matters too far.
Beyond these, the slide in oil price should prick our collective consciences on the misuse of the revenue that has overtime accrued to the nation from that commodity. It should send the message very clearly that there is time for every thing. It is possible that we will someday find to our dismay that a golden opportunity to lift our country from the shackles of poverty and underdevelopment has been frittered away. We may soon discover that a golden opportunity to elevate our country in the development matrix has been lost.
These are the foreboding issues that have been elevated to the fore by the sliding price of oil. In the ongoing electioneering campaigns, politicians have made issues out of the need to diversify the nation’s economic base. This is nothing new. It is only hoped it is not another vote catching gimmick that will give way to sectional and primordial considerations as a guide to economic decisions as soon as the elections are over.
-
Fed Govt slashes petrol price to N87 per litre
The Federal Government last night slashed the pump price of Petroleum Motor Spirit (PMS) to N87.00 per litre.
The new price regime, which took off from midnight, slices off N10 on every litre —an action that was immediately described as “too little” and “most likely political”.
Minister of Petroleum Resources Mrs Diezani Alison-Madueke last night directed the Petroleum Products Pricing Regulatory Agency (PPPRA) to immediately effect the change at the pumps.
She said: “As you may be aware there has been a lot of volatility in price of petroleum product particularly crude oil over the last few months , invariably this has meant that the price of the product in Nigeria has also been greatly impacted.”
“It is as a result of this under the approval and directive of Mr. President and in line with Section 6 Clause 1 of the Petroleum Act, that it is my responsibility as the Minister of Petroleum to announce that there will be a reduction in the pump price of petroleum (primium motor spirit) by N10, therefore the reduction will be from N97 per liter to N87 per liter effective as of mid-night Sunday the 18th of January 2015.”
“In line with this I have directed the Petroleum Product Pricing Regulatory Agency and the Directorate of Petroleum Resources to ensure there is strict adherence to this new pricing regime as soon as it takes effect from midnight Sunday 18th of January 2015.”
“I do hope the entire country will benefit immensely from this reduction in the pump price of petroleum.” she added
On why the government has to wait till this time, she said: “We think it is actually time to reduce the price. We have been watching very carefully for the last two weeks to ensure that the volatility did not destabilise this particular reduction in price and we think it is safe to implement it at this time.”
Last week, All Progressives Congress (APC) Presidential candidate Gen. Muhammadu Buhari urged the government to implement immediate price reduction on fuel products to reflect the downscaling in global oil prices.
In a statement, the APC Presidential Campaign Council asked the government to “stop stealing from Nigerians and allow them enjoy the relief that has come to consumers of petroleum products globally”.
The APC candidate said then, “The price of diesel which has been deregulated since 2009 still sells at the pump price of N150 and N170 per litre, the same pump price when the international benchmark per barrel of crude was over $100. Now that the international benchmark has dropped to $47.5 (USD) per barrel as at Monday, we ask: where is the deregulation and the relief which it ought to bring to local consumers of diesel?
“For the Nigerian consumers, unfortunately the collapse of crude oil price since October 2014 has not translated into any change in diesel, kerosene and PMS prices across the country.
“We challenge the federal government to reconcile the information on the website of the Petroleum Products Pricing and Regulatory Agency, indicating the maximum open market price of diesel per litre in December 2014 as being at N111.6 and the fact that the price has come down to less than $50 (USD) as at Monday.
“We want to posit that that the maximum indicative benchmark open consumers of diesel should pay is at a margin below N100 per litre. Therefore, Nigerians are being short-changed by about N50 to N70 on every litre of diesel sold by government.”
The Trade Union Congress (TUC) on January 5 asked the government to take advantage of the falling oil prices to reduce retail prices of petroleum products.
-
Pump price hike: EFCC begins probe
•Summons oil companies
The Economic and Financial Crimes Commission (EFCC) has begun investigation into the sales of Premium Motor Spirit (petrol) beyond the official pump price by some oil companies.
The commission has invited some of the errant companies based on the list forwarded to the anti-graft agency by the Department of Petroleum Resources (DPR).
Although the official pump price for PMS is N97, there had been price racketeering in some states, including the states in the Southeast, Southsouth, the 19 states in the North and a few states in the Southwest.
It was learnt that independent marketers are mostly culpable of price racketeering.
Findings revealed that the DPR, in the past few weeks, carried out a discreet investigation of oil firms involved in the scam.
The list of the suspected oil companies has been sent to the EFCC for necessary action.
A source in the anti-graft commission said: “Companies operating in the Downstream sector of the Nigerian oil industry, indicted for manipulating the price of premium motor spirit and selling above the approved pump prices, are to be quizzed by this commission.
“The list of the errant companies was forwarded to the anti-graft agency by the Department of Petroleum Resources (DPR).
“Letters of invitation have been dispatched to the affected companies while a crack team of operatives has been assembled in the commission’s Extractive Industry unit.”
As of press time last night, the EFCC was not specific on the number of oil companies it had invited.
The source added: “We will release the list as soon as the oil companies and their Chief Executives report to us.
“Once the list is out, the EFCC will be under pressure from the suspects and their backers.”
President Goodluck Jonathan, on May 4, said: “I am unaware that petrol is sold above the pump price. The government has no intentions of increasing the price of petrol now but if we must, it will not be done through the back door.”
-
Photo : Petrol tanker on two cars
Accident involving a petrol tanker on two vehicles spilling its contents on the Iyana Isolo bridge, Lagos Saturday morning PHOTO: ISAAC JIMOH AYODELE
-
Petrol, food imports cut external reserves to $43b
The foreign reserves fell to $43.5 billion as at January 2, as petroleum and food imports soared. The reserves, which stood at $45.4 billion last September 30, have maintained a steady fall in recent months.
The level of Nigeria’s external reserves fell to a low of $43.63 billion last December 30. This is the lowest level since November, 2012 and a decline of 10.7 per cent from 2013’s Year to Date peak of $48.86 billion.
The continuous use of the external buffers to support the value of the naira, declining oil receipts are among the contributing factors to the depletion. However, this level of reserves is sufficient to fund an import bill of approximately seven months.
With over 50 per cent of foreign exchange utilised for the importation of fuel and food, the Central Bank of Nigeria (CBN) said policy should focus on a comprehensive backward integration production strategy, while fast-tracking the repair of the existing refineries.
As at October 10, the reserves were at $45.3 billion, as against $46 billion on September 19, and $47 billion on August 19, data from the CBN website showed.
Further findings showed that the reserves were at $47.7 billion on July 1, and dropped to $47 billion on July 15. They also entered August 1 at $47 billion. The foreign currency reserves had five year ago, in August 2008, peaked at $68 billion before the global financial crises impacted negatively on it.
Chief Operating Officer, Citi Bank Nigeria, Akin Dawodu said the reserves are assets held by the CBN and monetary authorities, mostly in dollar to back their liabilities, such as the naira.
He explained that manipulating reserves levels can enable CBN intervene against volatile fluctuations in currency by affecting the exchange rate and increasing the demand for the naira. “Reserves act as shock absorber against factors that can negatively affect a country’s exchange rates and, therefore the CBN uses the reserves to maintain a steady rate,” he explained during training for financial journalists in Lagos.
Analysis of foreign exchange utilised by sectors revealed that $7.83 billion was expended on the importation of visible goods into the country in the second quarter as against $6.63 billion and $7.74 billion in first quarter and second quarter of 2012.
Also, large part of the reserves were utilised in the importation of oil, industrial, food and manufactured products in the ratio of 30.3, 28.0, 20.4 and 13.3 per cent of the total.
Further analysis revealed that a total of $8.70 billion or 52.6 per cent of total foreign exchange was used for services as against $3.78 billion in first quarter. Of this amount, financial services (banking and other financial services, asset management and money transmission) constituted the bulk, $7.78 billion or 89.3 per cent of total, while the balance was accounted for by transportation, communications, business and other services.
-
Burning desire; Ajayi O; ‘Yililo’; Checkpoint; Railway; Petrol well; Galaxy S4 Ad; Dangote Refinery
Why is Nigeria’s political leadership, so devilishly nasty when there are simple solutions to the suffering and ‘belt tightening’? These solutions are available and demonstrated by a few credit-worthy leaders. The Nigerian citizen has received since independence ‘dividends of a desperate democracy and malicious military intervention’ amounting to N1 in every N100 available. This is why most of Nigeria is still in the 19th century in water, health et cetera.
Where is the burning desire to serve? We know about the burning desire to steal Nigeria blind. But if the politicians, officials and civil servants had a burning desire to serve for just one year 2013-2014 as an ‘Amalgamation Centenary Gift’ would Nigeria’s naira be toilet paper? There is a saying that your funeral will not be judged by how many family and associates who attend but by how many strangers attend because you improved their lives. Where is the burning desire to serve? The good are too few to make a difference to the wretched lives of the nation’s citizens whose lives are further endangered through murder by police, note late murdered Ajayi Oladokun of Ikorodu.
Have you heard of Mr Gregory Muonyililo reportedly ‘arrested’ for filming checkpoint police? Greg has the right, like tourists, to film on the open streets. It is only when all, tourist and citizen, brandish cell phones and record corruption and intimidation that the ‘uniform’ will respect human rights. Such secret recording can be called ‘To Greg it’ or to ‘yililo’ it. Mr Muonyililo has a burning desire to serve and deserves MON. Where is the burning desire to serve in you?
To great national applause, IGP Abubakar banned checkpoints but they are back. Sadly nothing good lasts in Nigeria. Checkpoints are back with a vengeance including a near permanent checkpoint in Ibadan at Bodija SS Peter and Paul even on Sundays. Is this one legal?
We sympathise with the Police for the death of four police during the Ozehkome Affair and others on active duty. No amount of money will bring the murdered police men back alive to their bereaved wives and children. We are all equal before God, escort and escorted! The killing of security and escorts is callous when we are not at war with each other.
The NSCDC’s arrest of people with a petrol-contaminated well in their compound is odd as it is clear that the matter had been reported to both the police and the NNPC before the NSCDC intervened. The man in charge, interviewed on Channels TV, who alleged reporter ‘bias’ needs to be disciplined. His comments should go viral like ‘the oga at the top’. NSCDC must, if found wrong, pay compensation for defamation and wrongful arrest. There is no landlord or tenant with children who will dig a well to bring petrol or live near a well highly with petrol. I expected NSCDC to be more worried about prevention of catastrophe, like the Jesse explosion, than ‘playing to the gallery’ arrests. A uniform and a few laws do not make one God but make one seek to serve better. Or did the NSCDC suspect the DPO and NNPC of collusion with the landlord? How long ago was the well dug? When was petrol first smelt or drawn? Has anyone been identified drawing water from the well and distilling the petrol for profit or use? The answers to these simple questions will confirm or exclude criminal intent.
Attention: Advertising Commission. The Samsung Galaxy S4 advert humiliating an individual who stammers must be shut down as an insult. Stammering is not joke, but a socio-medical issue and should not be trivialised for public ridicule.
So at last the Northern elite have approved railways for Nigeria. As those same elite destroyed the railways 40 years ago, and kept the railway suppressed in favour of trailers, tankers. Ask Buhari and Babangida about Jakande Rail if you have forgotten. For the trailer business to thrive nationwide, the Northern elite instituted a national policy that the railways had to die. In fact rather than develop Apapa Port already fed by railway into a giant international port, government decided to move the new development to Tin Can Island which was only to be fed by road and trailers and not by railways thus guaranteeing trailer livelihood and Nigerian transport downfall for 50 years. Anyone used to Apapa Tin Can Island road will know the 4-10 hours delays and havoc caused by trailers for 40 years. This is the legacy of the anti-railway policy of federal governments for 40 years. It is such a pity that the same people who destroyed the railways are now using rejuvenated railways as dividends of democracy for electioneering. Nigerians should know that Nigeria’s Lagos port faced de-listing from international ports for not having ‘Railway Evacuation of Containers’.
Who will accept responsibility for the 40 years of suffering? We need 100kph trains.
Dangote is setting up a refinery in Nigeria and needs 400,000bpd. Remember that all the other private refinery attempts died because Nigeria refused to guarantee them the required 20-100,00bpd/ refinery. Obviously Dangote has got his guarantee. Will most of the 100 fractionated products be exported or made available locally? Dangote’s track record in flour, cement had sugar have led to outrageous price increases overburdening the masses, so what hope have we for costs of fuel and by-products of the Dangote Refinery?
-
Petrol: so scarce, so costly
The perennial scarcity of petroleum products and the attendant exorbitant cost remains a source of concern to most Nigerians, reports Ibrahim Apekhade Yusuf
Like most essential commodities, petroleum products, especially petrol (Premium Motor Spirit) and kerosene, have become priced out of the reach of the common man, a development, analysts argue, is a foretaste of what to expect in the coming months.
The looming oil crisis may have been caused in part by the scarcity of petroleum products, which according to economic pundits, was sadly inspired by the subsidy probe.
Antics of petrol attendants
Checks by The Nation revealed that most fuel stations across the country have been selling petroleum products at exorbitantly high cost outside the regulated pump price of N97 per litre, just as they adjust their metres at will.
From Lagos, Ibadan, to Lokoja, Abuja, Minna, Kano, Sokoto to Port Harcourt to Enugu, Owerri, petroleum pricing is now as inconsistent as they come.
Worst still, many fuel station attendants have since gained notoriety for seeking gratifications before they sell to vehicle owners or those buying in jerry-cans.
At most filling stations in Lagos metropolis and its environs, majority open for business, a litre of petrol sold for as much as N120 to N140 even as customers are made to pay as much as N200 to N300 as toll fare before they are served petrol.
Our correspondent was forced to part with N200 to obtain fuel at a filling station in Abule Egba axis of Lagos even as she observed that many other gas stations along the Lagos-Abeokuta corridor sell petroleum products at outrageous cost due to scarcity of the product.
Economics of petrol pricing
The major reason most of them adduced for the high cost is the non-availability of the products even as they argued that the landing cost of the product has risen astronomically.
Confirming this development, Mr. Babatunde Ogun, President, PENGASSAN, in an exclusive interview with The Nation over the weekend said the landing cost of petrol may have led to increase in the pump price.
“Using the Petroleum Products Pricing Regulatory Agency (PPPRA) template analysis, if subsidy is withdrawn the landing cost for November is N139.96. At official pump price of N97 the subsidy is N42.96 per litre of PMS,” Ogun said.
He further noted that, “The vagaries of crude oil market may jack the price up or down within to put the subsidy at between N40 and N45 per litre. That will invariably affect other economic indices like inflation, consumer price index and purchasing power parity.”
As to why the nation is witnessing a decrease in the importation of petrol, he said, “The marketers don’t have the fund or capital of their own to import.”
According to him, “The bulk of the capital fund in petroleum product marketing and distribution say 80 percent has gone into those basic infrastructures and equipment like building facilities for landing, storage, trucks, retails station and recurrent overheads, initial formation and licences and safety/training costs expenses are all key requisites that will even determine whether the business will be allowed to remain a going concern or not.
“Thus, banks short-term loans, even as high as it can be, is the last resort. Worst still, no hope on capital market again as it is no longer attractive even for PLCs.
“Due to the non-payment of subsidy and all the negative reports, loan to petroleum import is considered high risk and toxic and most banks would not take such risk that is further compounded by the stringent conditions to loans by the CBN and NDIC as oversight regulatory and enforcement functions.”
Given the difficulties in accessing subsidy funds, the PENGASSAN boss said, “It is no longer possible to guarantee supply which is contingent on fund availability with the terms and conditions attached to it.”
Still speaking on the vexing issue of subsidy, Ogun said, “So far, subsidy is ridden with so much corruption, mismanagement, scandals of fictitious importation and claims some of which are difficult to verify the truth or otherwise.
“The national question today is to find out clearly to whom subsidy should be directed. Is it being directed to the targeted beneficiaries who are now buying far above the pump price yet the importer still goes back to get subsidy difference at N97 per litre.
“I consider that subsidy is now a rip-off and we should re appraise the whole gamut and intent of subsidy.”
New pump price a fait accompli
Even as Nigerians groan under the weight of volatile pricing, there are indications the Federal Government may jack up the pump price from N97 to about N120 per litre, if fuel subsidy is withdrawn.
The hint on the new pump price emanated from a fact-sheet presented to select leaders of four political parties at the Presidential Villa, Abuja recently.
The document, obtained exclusively by The Nation states that subsidy must go, in the interest of the nation’s future and the masses.
According to Finance Minister, Dr.Ngozi Okonjo-Iweala, the removal of subsidy has become inevitable because of the drain on the economy.
Mrs Okonjo-Iweala hinted on what the pump price might look like next year, if the subsidy is removed.
She said: “The landing cost of a litre of PMS is about N123 per litre, based on an average crude oil price of US$113.98pb. To this, add the cost of distributing, bridging and profit margins of N15.72 per litre. This results in effective cost of N139/litre.”
Specifically, Okonjo-Iweala noted that “In 2012, the landing cost of a litre of PMS is estimated at N104/litre, based on a crude oil price of US$90pb. To this add the cost of distributing, bridging and profit margins of N15.72/litre. This results in effective cost of N120 per litre.
“The amount of subsidy equals to the difference between the consumer pump price of fuel versus the total cost of producing or importing. The price of petrol is N65 per litre, but actual cost of supply is N139 per litre. And projected at N120 per litre in 2012.
“This means that currently for every one litre of petrol purchased at the official price of N65, government contributes N73. Presently, only petrol and kerosene enjoy government subsidy. Diesel has already successfully been deregulated.”
John Iyobhebhe, a public affairs commentator based in London spoke on the pros and cons of subsidy removal.
According to him, “There is a prevailing view in Nigeria that the new Minister for Finance and Coordinating Minister for the Economy is advocating the IMF and World Bank Nigeria agenda. The theory is that deregulation and removing the subsidy may initially lead to inflationary pressures but as the market is opened up to investors billions of dollars will flow into the down steam sector and more private refineries’ will open for business in Nigeria.”
He, however, stressed that, “If the government is indirectly pursuing the IMF agenda for Nigeria then the removal of the subsidy is just one puzzle in the massive jigsaw. Inflation will erode the purchasing power of the Naira in people’s pockets. If you add official or market devaluation of the naira in the foreign exchange markets, it means that businesses and individuals holding their wealth in Naira will see it fall even further.”
The government, he further warned, must be careful because according to him, “Inflation, high unemployment, devaluation and massive retrenchment in the public and civil service are a dangerous cocktail.”
As the search for a lasting solution to the perennial fuel crisis lingers, many it has been hotly debated that deregulation of the sector would help to turn the tide in the sector.
This curiously is the stand of many of the marketers, who have been pushing for total deregulation.
The Executive Secretary, Major Oil Marketers Association of Nigeria, Obafemi Olawore, and the Chairman, Depot and Petroleum Products Marketers Association of Nigeria, Dapo Abiodun, had in separate interviews recently, called for total deregulation of the sector.
Speaking with our correspondent, the marketers told our correspondents that Nigerians should be ready to buy fuel at higher prices in 2013.
Chairman of the Independent Petroleum Marketers Association of Nigeria, Port Harcourt Unit, Mr. Sunny Nkpe, said since the President said fuel subsidy was not sustainable, Nigerians should get ready to pay more for fuel.
Currently, the Nigerian National Petroleum Corporation is solely responsible for the importation of fuel.
But the NNPC spokesman, Mr. Fidelis Pepple, have blamed marketers for the current fuel scarcity.
He said the marketers had not been selling products, which were supplied to them.
But the marketers faulted him, saying the fuel imported by the NNPC was inadequate.
In spite of the NNPC’s insistence that it had imported adequate fuel, there is a shortfall in supply.
Besides, the NNPC, which had abandoned oil pipelines, is relying on depot owners and marketers for distribution of fuel.
It is, however, instructive to note that pipeline vandalism is also at the centre of the fuel crisis as the Federal Government is said to loss about N105bn to activities of pipeline vandals annually.
This figure represents the cost of crude oil either stolen or wasted during such vandalism on the 5,120km of pipelines across the country.
While commenting on the menace of vandals, Ogun observed that, “Pipeline vandalisation comes from defective problems from foundation. Poor Installation, irregular maintenance and repairs worsened it. Community policing and surveillance is poorly managed. Compensation is misdirected no clear obligations or sanctions to community. All these factors need to be reassessed for effectiveness.”
In search of vibrant refineries
The Dr. Kalu Idika Kalu committee had recommended that all the four refineries in the country be put for sale within the next 18 months, so as to get new ones on board. But not many people share this view.
Speaking on the outcome of Kalu committee report, Ogun observed that there was nothing wrong with the committee’s recommendation but noted that certain things have to be clear.
“We as oil and gas workers are not averse to privatisation. But the government cannot sell their stake for strategic and security reasons. Two, immediate sale without TAM is unacceptable, the privatisation cannot be done in less than three years time considering all labour related issues, pension, severance etc, the sale of PHCN and NITEL is an example. So if you sell after three years, the new buyer uses another two years to make business decision and look for fund and another two years for the TAM. “Invariably the committee didn’t want the country to refine crude in Nigeria for the next eight years. This is unacceptable. The TAM must start now without any further delay. Government only give the contract to a reputable firm and a bank guarantee.”
On why most oil companies operating in the country don’t have their refineries unlike other countries, the PENGASSAN boss laid the blame on the legal framework obtainable in the country.
“Our law gave the companies that chance. The companies are businessmen, but government can address this anomaly in our PIP. Any company producing 200k oil and above must have a stake in refinery in Nigeria.”
Speaking further, he said, “The inefficiency is as a result of policy and government tedious approval process. A new well-structured PIB will address that.
“All this position has been canvassed by both unions in the oil gas to government since. But government has been running from one committee to the other.”
As the year rollover, the buzz word in different discussion groups shows that many Nigerians out there are indeed in a quandary, with many asking the obvious, “Where do we go from here?”
Time, will tell.