December 7, 2022

Marketers tackle recurring fuel shortages and price discrepancies at the pump – New Telegraph

Major operators in the oil and gas sector have expressed concerns about the strategy to curb the recurring shortage of gasoline, explaining why there are price discrepancies, writes SUCCESS NWOGU

The recurring scarcity of Premium Motor Spirit (PMS), commonly referred to as gasoline, and price discrepancies in the price of gasoline at the pumps at filling stations across Nigeria have become sources of concern for many operators and consumers of the energy sector.

The stakeholders, who therefore identified challenges and proposed solutions, are Ashgrove Energy’s Managing Director, Mahmud Tukur; the Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN); the Major Oil Marketers Association of Nigeria (MOMAN) and the Independent Petroleum Marketers Association of Nigeria (IPMAN).

Why the fuel shortage

Tukur attributed the scarcity of gasoline in some parts of the country to distribution problems. He said deregulation of the downstream sector will create healthy competition among traders and ensure availability of products and services for Nigerians. He said deregulation would stop product supply disruption or product distribution disruptions. According to him, it will also provide consumers with the best and most efficient price of PMS possible.

He said: “The fuel shortage is a distribution problem because you have the transport element and the cost itself. If you want to sell at the gas station, the price should reflect your cost. And suppose you tell people not to sell above the price at the pump. “In this case, you have to know what the market is selling because otherwise,

they will sell at a loss, so if you deregulate the market, it will ensure the availability of the product. Diesel not available? He is. Because it has been deregulated.

Reasons for price discrepancies

Tukur said the current price deference could be jokingly considered deregulation in practice. He noted that costs are incurred when transporting PMS from Lagos to the North and East, adding that these costs are taken into account when deciding the pump price of PMS in these areas. He said, “The same goods you buy in Lagos, do you buy the same in Maiduguri? There is a difference because if it is a commodity from Lagos to Maiduguri, and vice versa, it has to be transported.

So there must be a price difference. But if there is a policy that says gasoline should sell for the same price everywhere in Nigeria, the only way to do that is for the government to pay the transportation differential. “This transport differential, and what is its composition?

An oil tanker uses diesel and the price of diesel has increased significantly due to rising oil price and rising exchange rate. Will the price of diesel not increase? It will be. Aren’t the truck you use, tires and other spare parts imported?

“They are imported. So with all of these things, naturally, you have a high cost. The cost of this transport has quadrupled, but if you have to pay the same price and if the government has declared that the PMS must be sold at the same price in Lagos as in Maiduguri, South West (Lagos) – North East; From Southeast to Northeast the price will be the same price; you can’t get there without transportation.

“So if you’re transporting, there’s a huge pressure impacting that transport cost. It has to be reflected in the price of the product. Or the government has to reimburse transporters or traders for that increased cost. That’s is the problem. “It’s not a problem of supply.

The Nigerian National Petroleum Company Limited, (NNPCL) is the supplier, the products are imported. It now becomes a distribution issue because when you have to move the product, that cost of moving from A to B, who covers that cost? This is what we do not watch as Nigerians.

“The second question is, what are the cost elements? You remember you bring the product internationally, that’s the NNPC, and they transfer it at the price of naira to the traders. This is where the subsidies happen. So if for the sake of discussion they import it at 200 naira per litre, they sell it abroad at 100 naira per litre, that’s where the subsidies are happening. So this talk that marketers make money from subsidy, marketers love subsidy, that is absolute misinformation.

He added: “Then marketers now have to charter a ship. If you charter a vessel, you will pay the freight in dollars. So you now come to dock the ship in the port. You pay fees in dollars, you pay the Nigerian Maritime Administration and Safety Agency (NIMASA) in dollars, all of these things are what the Central Bank of Nigeria (CBN) calls invincible transactions.

“And they don’t provide the dollars for these transactions, meanwhile the agency responsible for the price, i.e. NNPC clearing, they did the calculation using the official exchange rate because they are the government.

So if it’s going to cost you $10,000; you say $10,000 times 403 and then you say it’s N4,030,000. But you know you buy those dollars at N700 or N800 and pass those costs back to naira, so a government model whose exchange rate is not realistic, which is not available, can it be used to determine the price? It is not possible.

“So Nigerians won’t say, ‘marketers are overselling, marketers are cheating Nigerians?’ It’s not true because you didn’t ask: what is the cost of this pricing in the first place?

And we accept that oil and PMS prices have gone up. “We are the only part of the world that produces oil and squanders all profits from oil production by subsidizing the cost option of petroleum products. that is what is causing this economic crisis.

People blame CBN Governor Godwin Emefiele that dollars are not available. You can’t give what you don’t have. Can the CBN Governor make unavailable dollars available? No. “What is the source of our dollar? Isn’t it oil production?

We should be producing about 2mbd of oil but we are producing less than 1.1mbd so what little oil we produce we now trade it for an oil product bring in and sell at a subsidized price, meanwhile we say we consume 70 million liters of PMS a day, but no one really knows the truth. “The price of the product across borders is so attractive that we know there is smuggling.

But I don’t think we consume 70 million liters a day. Even though the NNPC said it is 63 m. It’s still not possible! “That may be the loaded figure, but what is our consumed figure? How many times has the NNPC Group Managing Director said that we don’t know how much we consume in this country? We don’t know how much we consume because we are sure that we consume less than we charge.

DAPPMAN speaks

DAPPMAN Chairman Akpani said the fuel shortage in Abuja was caused by logistical problems, floods and bad roads, adding that panic buying is one of the reasons for queues in gas stations in some states in Nigeria.

She, however, claimed that there was no shortage of produce in Lagos, but that the problem of distribution was the cause of the recent shortage and queues seen in Lagos. She said the price discrepancies were due to fluctuating exchange rate and transportation costs and unauthorized levies incurred when moving the proceeds from the deposit to other parts of the country.

MOMAN’s position

The Executive Secretary, MOMAN, Mr. Clement Isong, said that the gasoline shortage and attendant woes will end when the Federal Government deregulates the importation of gasoline.

Isong said the full implementation of deregulation would solve the recurring fuel shortage in the country. He explained that full deregulation meant that the price of the product first had to reflect full cost recovery and had to be predictable and there had to be easy entry and exit from the market.

He said there would be no situation where there was only one PMS importer and one supplier in the market. He explained that the monopoly would always lead to challenges along the supply chain. He explained that once this sole supplier has a challenge, the market will not be supplied.

He said: “Full deregulation gives us more suppliers, all accountable to their shareholders and stakeholders.” He said tackling the vagaries of foreign exchange would lead to the stabilization of the pump price of gasoline. Isong said, “To ensure price stabilization, unfortunately many elements involved in the supply chain are in dollars.

The Nigerian Ports Authority (NPA) invoices in dollars, NIMASA invoices in dollars and shipowners invoice in dollars. “We know what is happening with the exchange rate. There are no readily available dollars.

All of this has led to an increase in the cost of the supply chain and an increase in cost recovery. Anything to do with the dollar will have an impact, positive or negative, on the price. So if you want to stabilize the price, the first thing you need to do is stabilize your exchange rate and improve your exchange rate manifest.

IPMAN opposes monopoly

The national operations controller, IPMAN, Mr. Mike Osatuyi, said that operating a monopoly on importing gasoline would not stop the fuel shortage. He advised the government to deregulate fuel importation so that other players import gasoline and market forces determine the pump price of the product.

He said deregulation would open the market for suppliers to bring in fuel and market forces would determine the price. He noted that there is no shortage of diesel, kerosene and gas because importers can buy foreign currency and import it.

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