The Independent Petroleum Marketers Association of Nigeria (lPMAN) says incessant increase in tariff of petroleum products by the Nigerian Midstream and Downstream Petroleum Regulatory (NMDPRA) might hinder the success of oil subsidy removal.
According to the News Agency of Nigeria (NAN), Alhaji Debo Ahmed, National President, IPMAN made the observation in a statement he issued to newsmen on Tuesday in Lagos.
Ahmed said the increase could also adversely affect the overall business environment of the downstream sector.
He said arbitrary and excessive nature of the increment not only discourages potential investors, but creates barriers for fresh investors and places burden on existing businesses.
According to him, the resultant cost is transferred to the consumers and the public.
“Those that are already in the business will pass the burden to the consuming public and definitely this affects the cost of products.
“I think NMDPRA, as agent to the Federal Government, should advise them on the way to succeed on this removal of oil subsidy,” he said.
Ahmed noted that the recent spike in diesel pricing and the mounting unpaid bills emanating from the old Petroleum Equalisation Funds demonstrate the tangible impact on stakeholders in the downstream sector.
“In economics, payment of internal debts increases the economic activities of a country and lessens the attention given to the dollar.
“When internal economic activities boom, it generates employment and spurs up the value of the local currency,” Ahmed added.
“IPMAN, as an association, will advise the authorities to critically look into the tariff increase, which will not help the oil subsidy removal.
“Between 2020 and 2023, NMDPRA had increased some, if not all, of its operational tariffs to over 600 percent and added other unnecessary tariffs, generating lines to the already existing ones,” he said.
He cited an example that calibration per tank, which hitherto charged N20,000 per tank, had been increased to N150,000 per tank, representing 650 percent.
He said that the pressure testing, which cost N20 000 per tank, had also increased to N150,000 per tank, respectively.
Ahmed pointed out that the cumulative effect of these tariff increases was imposing considerable financial burdens on existing and new stations.
According to him, renewing a licence for an existing station could amount to over N2 million, while new stations might face expenses exceeding N4 million.
Ahmed expressed concerns about a new five percent tax on the sales or acquisition of a filling station, which he believed could discourage sales, mergers, and acquisitions within the industry.
He explained that these tariff increases were counter-productive to the goal of deregulation and intended to attract more investors, open the market, ensure product availability, and offer consumers choices.
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