Two key issues at the centre of the current yuletide fuel scarcity have been revealed vide a report by the Business Hilights Intelligence Unit (BHIU).
According to the report released weekend in Lagos, “The continued double status assumed by the Nigerian National Petroleum Corporation (NNPC) by being a regulator and at the same time a player in product marketing cannot pass the test of time. This means that NNPC cannot for too long sustain being sole importer that can saturate products across the federation.
“Again, the luring of independent petroleum marketers into the sector some years ago with flexible access to forex which had been shortchanged by recent policy summersault has removed marketers from business and they are ‘too big to fall’ having invested much over the years.
“With the non easy access to forex and banks’ cold feet in granting letters of credit to marketers’, they are now at critical cross-road that can only be resolved either by return to policy status quo or total liberalization of fuel price so that marketers can source their forex, import and freely sale as they wish.
Already, as the fuel situation bites harder across 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).
In their submission, sourcing forex without government’s intervention and importing products can only work when they are allowed to sale at prices they so wish to remain in business. Otherwise, selling the product at N145 per litre is no longer feasible with the current exchange rate.
It would be recalled that independent marketers had 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.
According to the National Operations Controller, Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr. Mike Osatuyi, “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.”
Just like the BHIU report said, Osatuyi was of the view that the government through the Central Bank of Nigeria (CBN) should have intervened by providing foreign exchange at a special rate solely for the PMS importation for both the NNPC and private importers.
Continuing, the IPMAN boss argued that “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.”
Corroborating IMPAN chief, the Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore, noted that “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.”
Before now, the Executive Secretary, Depot and Petroleum Products Marketers Association (DPPMA), Mr. Olufemi Adewole, had hinted that globally, “the increase in price of crude oil always lead to a corresponding increase in the prices of refined products especially in economies where products are largely imported.