Border closure: Oil marketers count losses

Marketers operating in the downstream sector of the Nigerian oil and gas industry have started counting their losses due to federal government’s ban on supplies of petroleum products to filling stations situated 20 kilometres from the borders across the country.

Nigeria, which operates a regulated downstream sector, has been struggling to cope with fuel subsidy it is paying on imported refined petroleum products like Premium Motor Spirits (PMS) otherwise called petrol and Dual Purpose Kerosene (DPK) otherwise called petrol.

There has been controversy on how much of petrol and kerosene Nigerians consume daily because the country is unable to give accurate estimates of daily consumption of petrol and kerosene due to the fact that Nigeria’s products are the cheapest in Africa.

Petrol sells between N300 and N400 per litre in Benin Republic, Ghana, Cameroon and Cote d’Ivoire while Nigeria sells the product at a subsidised rate of N145 per litre.

In the event of this, smugglers take advantage of the existing arbitrage to smuggle the subsidised fuel from Nigeria at N133 per litre ex-depot price and to neighbouring countries to sell at between N300 and N400 per litre.

However, a marketer who spoke on condition of anonymity criticised the government policy. He told Tribune Online that this is not the first time government will be doing this but it has never worked.

According to him, “this is not the first time the government will close the borders or stop selling products to marketers with filling stations close to the borders. But at the end of the day, it is to make some people richer and make new billionaires while others suffer major losses due to lack of sales.”

When asked to explain further, he stated that “Nigeria has over 1000 entry points with which products can be smuggled in and out easily.

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“Why smuggling business has continued unabated is because the security agents have always been accomplices. Imported rice is still being smuggled into the country as we speak, while petrol and kerosene are being smuggled out of the country as we speak. If the security agencies can be sincere with the policy, which I doubt, maybe the policy will succeed,” he said.

He stated further that some fuel attendants, truck drivers and other personnel must have lost their jobs due to the policy and “the monetary value of these losses and their impacts on the economy will be felt by the country at large. It is like we are using one wrong to correct another wrong. The security agencies could have been sincere and diligent with their duties and smuggling in and out of Nigeria will be at the minimal level.”

Speaking with the Sunday Tribune at the weekend, Mr Femi Adewole, the Executive Secretary, Depot and Petroleum Products Marketers Association (DAPPMA), stated that no sacrifice is too big for the good of the nation but also insisted that the policy would fail unless the security agencies were diligent and sincere with their job.

According to him, “It is only for a while, and the Department of Petroleum Resources (DPR) won’t withdraw their license. Those affected marketers must have been looking forward to making profit ‘on’ their investments and the people living in that area have rights to buy fuel but where the fuel will now be smuggled outside is a “no” for us. We don’t want it.”

He said the directive was not in the interest of the oil marketers as it would negatively affect their investments, adding: “However, if it will curtail and help the government deal with those who are actually involved in smuggling, anything the government will do to sanitise the system is okay by us.

“We have retail outlets within the 20km restriction areas but our hope is that the security agents that are monitoring the implementation of the restriction will be able to do a sincere job.

“We don’t want the restriction to be relaxed in some parts of the country while it is adhered to strictly in other places.”
Adewole noted that the directive was to ensure that the government only pays for petroleum products consumed by Nigerians, which is for the good of the country.

“We would not have anything against it if it is implemented wholly and fully. In which case, nobody will be allowed to take products outside. We will be able to determine what we are consuming inside and no more wastage. At the end of the day, we are the beneficiaries. We might have some investments close to the areas of restrictions but if it is only implemented and sincerely followed up and there are no sacred cows, the country will be better for it.

“The policy may fail if selectively implemented; if our security agencies are sincere, the country will be better for it because whatever the government is paying subsidy on will be consumed locally and won’t get out of the country,” he said.

On his part, Chinedu Okoronkwo, National President of Independent Petroleum Marketers Association of Nigeria (IPMAN) told Sunday Tribune that the affected marketers were very few and that they can always take their businesses to their filling stations outside the 20km perimeter under ban.

According to him, “Any efforts by the government to make the economy work should be applauded. Although the policy stipulated that filling stations within 20 kilometres will not get supplies from the NNPC, but not all filling stations are situated there.