The Major Oil Marketers Association of Nigeria (MOMAN) has called on the Federal Government to allow for margins for marketers in order for the marketers to break even and sustain the employment of their workers.
In an interview with the Tribune Online on the sideline of the Nigerian International Petroleum Summit (NIPS) in Abuja, the Chairman of MOMAN, Tunji Oyebanji, stated that in MOMAN, “our direction is that if in the interim, government believes that the time is not right to allow for appropriate pricing, it will be good if they can allow us to have more margins so that we can make more and invest more in other areas of the downstream.
“This is because presently, our margins have been fixed since 2016 and before that, it was fixed for nine years. Meanwhile, inflation continues to rise every day and by implications, it means what we are earning in real term continues to depreciate. It is making life very tough for us. If you look at many of the companies, two of us have released unaudited results for last year and they posted losses.”
He said many International Oil Companies (IOCs) have divested their interests in the downstream industry because the margins, as approved by the government, do not allow for optimal returns and it is affecting their operations in areas of international best practices.
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“For us, it is about survival. Many of the things you see regarding IOCs’ participation in the downstream, they are leaving not because they can’t do the business again but it is difficult to make returns.
“Indigenous players, maybe, can survive with smaller margins but the IOCs have standards to maintain which is the same standard they will maintain in their respective home country.
“Therefore, to maintain the standard, they have to look at the equation and ask themselves, if they want to do this business the way it should be done on safety, the nature of the trucks, health, safety and environment (HSE), et al.”
He argued that, for instance, an IOC may have to import a standard brand new truck for its downstream operations and it may cost N70million which is the standard they must adhere to.
But in other to survive, he said a local player can import a 25-year-old truck because that is what the margin allows him to buy.
“Many people will say yes, indigenous players are playing in the downstream but people are not looking at the trucks and other safety issues.
“Yes, we have several indigenous players in the industry, but do they operate with the state of the art equipment or modern equipment, the answer is that people tend to cut corners here and there. These are some of the considerations we really need to look into,” he said.
Oyebamji, however, called for deregulation of the downstream industry and this he said will attract much needed private investment in the entire downstream value chain which includes distribution logistics like pipeline and others.
”We know that energy security is important to the government, they don’t want queues and to a large extent, we have been achieving this but you will agree with me that there is a cost to achieving all this goal,” he said.
According to the pricing template of the Petroleum Products Pricing Regulatory Agency (PPPRA) of 20th February 2020, the total distribution margin for marketers including dealers, retailers and the numerous middlemen was N19.37k per litre.
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