Depot owners insist on full deregulation of downstream oil, gas sector
http://www.hrlnews.com/2019/05/depot-owners-insist-on-full.html
The Depot and Petroleum Marketers Association of Nigeria (DAPMAN)
says the rise in landing cost of petroleum products has renewed calls
for full deregulation.
The group therefore, called for deregulation of the downstream sub-sector of the nation’s oil and gas industry.
Its Executive Secretary, Mr Olufemi Adewole, told the News Agency of
Nigeria (NAN) in Lagos, that deregulation of the downstream remained
the best option as the ongoing subsidy by the Nigerian National
Petroleum Corporation (NNPC) was not sustainable.
Adewole said that as private marketers continued to stay on the
sidelines in terms of petroleum products importation, depot owners had
reiterated the need for the Federal Government to fully deregulate the
fuel market.
He said that NNPC had been the sole importer of petrol into the
country for two years and that private oil marketers stopped importation
due to shortage of foreign exchange and increase in crude oil prices,
which made the landing cost of the product higher than the official pump
price of N145 per litre.
According to him, if fully deregulated, it will also help the
government to use the subsidy money to develop other sectors. Other
countries sell petrol higher that Nigeria’s pump price.
The DAPPMA scribe, however, lamented NNPC’s decision to sell Premium
Motor Spirit (PMS) to them at N117 per litre, admitting that the price
was not only outrageous but not cost effective.
He added that the N111 per litre price, which NNPC was selling fuel
to them was at an insignificant margin, wondering what would happen when
the state-run oil firm had increased the price to N117.
Adewole said NNPC’s monopoly of fuel importation had compounded their woes.
He said: “By the time depot owners, who are mostly marketers, add
other costs incurred in the course of buying fuel from NNPC and later
sell the product at the pump price of N145 per litre to consumers, they
will be left with little or no profits.
“More worrisome is the fact that NNPC controls fuel importation, a
development which has compelled marketers to sell the product at a
particular price. That is the situation we find ourselves in.
“We are praying for solutions to problems inhibiting the growth of
the industry, especially the downstream sub-sector,’’ Adewole said.
He said, NNPC sold fuel only to depot owners, who had Pro-foma
Invoice, a development which implied that any depot owner or marketer,
who does not have a Pro-foma Invoice would not be able to buy fuel.
He said diesel price was deregulated, noting that marketers were selling the product at between N220 to N230 per litre.
“No depot owner or marketer, he said, can say he or she is making profit under the new price regime.
“More worrisome is the fact that NNPC controls fuel importation, a
development which has compelled marketers to sell the product at a
particular price, that is the situation we find ourselves in,” he said.
Adewole, admitted the fears expressed by depot owners over the new
price regime. According to him, the fears stemmed from the fact that
depot owners made very little profit because of the current price
system. (NAN)