As motorists continue to groan under the scarcity of the Premium Motor Spirit (PMS) otherwise known as petrol, stakeholders across the industry are proferring solutions to strategies and policies to adopt in ensuring that the recurring scarcity of the product is permanently resolved.
As part of the solutions, critical stakeholders in the industry are clamouring for an end to the subsidy regime, liberalisation of petrol import regime and making foreign exchange (forex) available to petrol marketers at government official rate. Presently, marketers source their forex need from the parallel market, which is almost a double of the Central Bank of Nigeria (CBN)’s rate.
Chairman, Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Mrs. Winifred Akpani, said that as long as the Nigerian National Petroleum Company (NNPC) Limited remains the primary supplier of products to the market, coupled with forex and inflationary challenges, there would always be limited inflow of products, which invariably leads to recurring fuel scarcity.
According to her, important and strategic decisions, which should include full deregulation of the sector and a deliberate strategy geared towards creating an enabling environment for all petroleum marketers to add value, alongside the NNPC, has to be made so as to achieve an efficient sector.
DAPPMAN, she further explained, considers the declaration by President Muhammadu Buhari that fuel subsidy will end in 2023 as the right decision that will reposition the sector for sustainable growth and development.
“It is a relief to see the conversation around fuel subsidy removal gaining traction in the nation. In Nigeria, numerous reports have indicated how the subsidy on PMS encourages illegal exportation to some neighbouring countries. The price differential has for decades served as a huge incentive for moving PMS across the borders where the product is then sold at a premium. Invariably, the subsidy regime, which was designed to serve the purpose of giving more Nigerians access to PMS has only succeeded in benefitting people involved in underhand activities,” Mrs. Akpani explained, adding that by deregulating, it will ultimately liberalise and transform the downstream sector with attendant benefits for the economy through the supply and distribution of premium and environmentally friendly petroleum products.
Besides, considering the huge consumption of petrol in the country, the DAPPMAN Chairman argued that the present situation that gives only the NNPC the role of sole importer of PMS is not sustainable.
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An official of the Independent Petroleum Marketers Association of Nigeria (IPMAN) revealed that the government also has blame in the entire importation problem of petrol. According to the official, with the commercialisation of the NNPCL, the firm has become a competitor with other operators in the sector as such should not be given any market advantage by the government, especially in the area of access to buying foreign exchange at government official rate. The NNPC is now the major oil downstream company in the country with its acquisition of OVH.
Accessing forex for transactions has been an insurmountable hurdle for petroleum marketers. The difference between CBN exchange rate and the parallel market exchange rate continues to get wider by the day. Currently, the CBN exchange rate stands at about N450 to $1, while the parallel market exchange rate is about N770 to $1.
“The NNPCL commercialisation ought to have changed the era of preferential treatment it got when it was a state-owned entity. There should be a level playing ground for all operators to compete in the market,” the official, who pleaded to remain anonymous on this said.
But this may remain a tall dream as the NNPC remains way above competition. The NNPC for instance, sells the nation’s crude oil and therefore earns forex making her independent of relying solely on the CBN or any commercial bank for forex. Besides, it is extremely easier for the NNPC to import petrol because such importation is not paid for directly as it is done on swap, that is “crude for fuel” basis.
The National Operations Controller, IPMAN, Mike Osatuyi, agreed that marketers are finding it very difficult getting the product owing to the shortage in supply. Those that have to sell, he explained, have had to go the ‘extra mile’ to get supply to their filling stations.
“NNPCL is the sole importer of petrol, so if they cannot make the product available, then how do we get petrol to lift and sell to the public?” Osatuyi asked rhetorically.
The situation has further buttressed the call by marketers that other marketers like the MOMAN, IPMAN among others should be allowed to access foreign exchange at the government official price to enable them also import the commodity.
DAPPMAN therefore called on the government to establish a level playing field in the sector by giving petroleum marketers access to forex at the CBN exchange rate for their operations. “This is a passionate appeal to the government as we can confidently state that accessing forex through the CBN window will significantly enhance capacity and facilitate seamless supply of PMS as we head into the Yuletide and ultimately, birth a regime of sustainability in terms of storage, distribution, and supply across the nation,” Mrs. Akpani said, assuring that getting access to forex from the official window and paying for levies/fees in the local currency would markedly transform service levels and spur petrol availability to new heights across the nation.