of the country, private oil marketers are calling for government
intervention to enable them to access foreign exchange at a special rate
for the importation of Premium Motor Spirit (petrol).
According to them, selling the product at N145 per litre is no longer feasible with the current exchange rate.
Private marketers stopped fuel importation last year due to shortage
of foreign exchange and increase in crude prices, which they said had
made it unprofitable to import petrol and sell same at N145 per litre.
The National Operations Controller, Independent Petroleum Marketers
Association of Nigeria, Mr. Mike Osatuyi, said, “The problem is that the
importation (of petrol) is being handled almost 100 per cent by the
Nigerian National Petroleum Corporation as private importers have backed
out because the increase in crude price has made the landing cost enter
subsidy.
“When the crude price hit $59 per barrel, we could not sell petrol
again at N145 per litre if we were importing on our own. It is only the
government (NNPC) that is importing and can warehouse the subsidy.”
He said the government through the Central Bank of Nigeria should
have intervened by providing foreign exchange at a special rate solely
for the PMS importation for both the NNPC and private importers.
Osatuyi said, “Right now, the landing cost of the PMS is N154. If you
are importing at N305 to the dollar, by the time you add bank charges,
it comes to N307 to the dollar. If you apply that to the current crude
price, the landing cost is N154-N155. By the time you add all the
margins, the pump price is about N160-N167.
“Before private importers can resume importation, the exchange rate
to a dollar must be N250 and we can sell at the price of N145 per
litre.”
Commenting on the forex challenge, the Executive Secretary, Major Oil
Marketers Association of Nigeria, Mr. Obafemi Olawore, also said, “I am
told that some people have special rates. If they do, fine; let them
give to us also. We will prefer a situation where we have access to
forex exchange and we can import.”
The Executive Secretary, Depot and Petroleum Products Marketers
Association, Mr. Olufemi Adewole, in a telephone interview with our
correspondent earlier in the month, noted that the increase in price of
crude oil had led to a corresponding increase in the prices of refined
products.
“Landing cost of the PMS today has increased. By the time we land the
product based on the international crude oil prices, petrol should be
selling for between N165 and N170 per litre. But government is saying we
should sell at N145. So, if there is no subsidy, we have to depend on
the NNPC to give us the product,” he said.
A top official of a Lagos-based oil marketing company told our
correspondent on condition of anonymity, “Unless government gives
another ceiling price, it will not be good to sell at the current price
if you import now. It is expensive to import now. Some people who have
customers they don’t want to lose can just do small imports.”
Analysts at FBNQuest Capital, in an emailed note on Friday, said
improved forex liquidity had led to some relief for players within the
downstream sector.
“Initially, oil marketers depended solely on the parallel market for
their forex requirements. However, there is now better access via the
CBN’s official windows. Furthermore, over the past year, the naira has
appreciated considerably on the parallel market, making PMS importation
relatively affordable for marketers that still source forex from that
market,” they added.
Several stakeholders, including the Lagos Chamber of Commerce and
Industry, have expressed concerns about the current state of the
nation’s downstream petroleum sector, especially a situation whereby the
NNPC has become the sole importer of the product into the country.
The Director General, LCCI, Mr. Muda Yusuf, in a telephone interview
with our correspondent, said, “It’s unfortunate that fuel queues have
returned. But there is a very fundamental problem with our petroleum
downstream sector, and the problem is that it is over-regulated. You
cannot have a sector as big as that serving our size of population and
we expect only the government provider to be supplying fuel. It is not a
sustainable model.
“So, there is an urgent need to push back the role of government in
the issue of retailing fuel, importing fuel and all of that. Right now,
it is only the NNPC that is importing the PMS. Such a thing cannot be
efficient; it creates room for all manner of abuses; some of which the
marketers cannot disclose because of their own businesses.”
He said the private sector should be allowed to play a bigger role in
importation, refining, distribution, marketing and other activities in
the downstream sector.
Following the severe fuel scarcity the country experienced in the
first quarter and parts of second quarter of last year, the Federal
Government on May 11, 2016 increased the price of petrol to N145 per
litre from N86, putting an end to fuel subsidy to marketers, in what was
described as partial liberalisation of the sector.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu,
recently noted that the non-availability of forex and the inability of
marketers to open letters of credit had then forced them to stop
importation.
He said the NNPC was forced to take up the obligation of providing
more than 90 per cent of the domestic requirement to cover the demand
for petroleum products, adding, “The NNPC was not designed to provide
this kind of service. Historically, the NNPC had done an average of 48
per cent of Nigeria’s fuel requirement.”
Source: PUNCH