The number of operators in the
downstream oil sector has continued to thin out out since the
commencement of the partial deregulation of the industry, a development
that led to an increase in the pump price of petrol.
It was learnt on Saturday that petroleum
product marketers, particularly independent dealers, were gradually
pulling out of the petrol sale business across the country as a result
of the high cost currently required to run the business.
The high business operating cost,
according to marketers, is occasioned by the recent hike in the pump
price of the Premium Motor Spirit, popularly called petrol, by the
Federal Government and the complete removal of the fuel subsidy.
Government officials, experts and oil marketers, who spoke with SUNDAY PUNCH
in separate interviews, said the capital outlay currently required to
effectively operate in the downstream oil sector had virtually doubled.
They also explained that the instability
in the foreign exchange market had adversely affected the finances of
many oil dealers, adding that a number of marketers were finding it
tough to repay the loans obtained from banks, not to talk of garnering
additional funds to pay for the PMS at its new rate.
The Federal Government on May 10, 2016
announced an immediate increase in the pump price of the PMS, after
months of uncertainty in which Nigerians endured debilitating shortage
of petrol.
It increased the petrol price from N86.5
per litre to between N135 and N145 per litre, effectively putting an
end to the subsidy regime, as it declared that oil marketers were
thenceforth free to source for forex from any available channel.
“Of course, the worst hit are the
independent oil marketers and it is unfortunate,” said the Corporate
Affairs Manager, Nipco Plc, an oil marketing firm, Mr. Taofeeq Lawal.
Lawal stated that although the partial
deregulation of the downstream sector had led to the availability of
products across the country, the move, on the other hand, had thrown a
lot of marketers out of business.
According to him, the ex-depot price of
petrol, which used to be less than N90 per litre, depending on the
depot, had increased to about N134 per litre, adding that many of the
affected marketers were finding it difficult to raise enough funds to
load products.
He said, “One thing that is prevalent
now in the sector is that the number of operators is reducing by the day
because of the cost implication in the business. To pick 33,000 litres
of the PMS, you need about N5m, whereas in the past, it used to be about
N2.7m. But right now, you need at least N4.7m to do that. So. the cost
has appreciated and this has forced a number of operators out of the
business.
“Also the average price you can get the
PMS from any depot is N134 per litre and you can get 33,000 litres for
one truck. The price of product to be loaded in a truck of this capacity
used to be around N2.65m to N2.7m, but right now, it has risen to about
N4.7m and this has really affected many marketers negatively.”
Lawal also stated that another factor
negatively affecting turnover in the business was the sharp decrease in
the demand for petrol, adding that “people are being very cautious
nowadays about how they use fuel.”
An Executive Member of the
Reconciliation Committee of the Independent Petroleum Marketers
Association of Nigeria, Mr. Dibu Aderigbigbe, confirmed that many
independent marketers had been out of business since the new PMS pricing
policy took effect.
He, however, blamed the Nigerian
National Petroleum Corporation for being the major cause of the
challenges facing the affected independent marketers.
Aderigbigbe said independent oil
marketers had about 7,000 loading tickets with the NNPC that had yet to
be loaded and that these tickets translated to about N70bn.
“Now, this is money borrowed from banks
and part of it is our working capital, but as I speak with you these
huge funds are currently tied down. So, why won’t marketers be out of
business,” he said.
The IPMAN official said the association
had approached the Minister of State for Petroleum Resources, Dr. Ibe
Kachikwu, and the NNPC on the matter, but had not received any response.
Another independent marketer noted that
many dealers were not just out of business because of the recent petrol
price increase, but that the situation was worsened by the resolve of
the NNPC not to supply products to IPMAN members.
The marketer, who spoke to our
correspondent in confidence, said, “As it is now, if you go to the NNPC,
you have billions of naira belonging to independent marketers tied down
at the corporation. And this is because many marketers can’t pay the
difference to load and the NNPC is not going to do back-loading for
you.”
On measures to address the situation, an
official at the Federal Ministry of Petroleum Resources stated that the
national oil firm had suggested the provision of debit notes to the
independent marketers to pay the difference.
“It might not be right to say
categorically that they are out of business completely, they are in
business but they cannot use the money to load products until they pay
the difference,” the official, who on condition of anonymity as he was
not authorised to speak on the matter, said.
The Group General Manager, Group Public
Affairs Division, NNPC, Mr. Garba-Deen Mohammed, said he was aware of
the complaints of IPMAN members.
But when he was asked to speak for the
corporation on the matter, Mohammed promised to send a mail that dealt
with the issue comprehensively.
However, he had yet to do so, about 12
hours after the enquiry was sent to him, with repeated calls and text
messages to remind him of the need for corporation’s inputs.
