DESPITE the suspension placed on removal of fuel subsidy, Nigerians in the last six months have had to pay more for Premium Motor Spirit (PMS) amidst heavy scarcity.
Subsidy on the price of PMS would have been ripe for removal by the end of July 2022 in accordance with the Petroleum Industry Act (PIA) but public outcry had led to its suspension. President Muhammadu Buhari had in January 2022 suspended fuel subsidy removal as this was capable of worsening the suffering of Nigerians.
However, Nigerians in the last six months have had to repeatedly contend with product scarcity amidst fuel price hikes.
Currently, fuel queues have in the last three weeks resurfaced in filling stations in Abuja, Lagos and some other parts of the country.
Oil marketers blamed the development on non-payment of backlogs of bridging claims, an increase in the cost of diesel by tanker drivers to transport products across the country among other issues.
This, according to them, has hampered the distribution of products across the country. President of Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Dr Prince Billy Harry who spoke with the Nigerian Tribune on Tuesday, said the current supply of PMS cannot sufficiently meet demand.
According to him, retail outlets have not been getting sufficient supply, hence the scarcity being experienced.
His words, “It is simply a difficulty in meeting demand. Supply is not efficient, supply is not coming as it is supposed to come, of course, the market forces are now playing out where demand is now far higher than supply. This is what is happening. That is why we have been calling for deregulation and Nigerians must brace up for it. If we are not getting sufficient PMS supply from the system, how will the consumption requirements be met? Demand has overwhelmed supply. So that is where we are.”
He also called for total deregulation of the sector stressing that “If FG does not deregulate and the situation keeps going like this, we will get to the point where the whole country will just go to a standstill. Right now, many filling stations cannot even operate their retail outlets because of lack of diesel.”
The spokesperson of the Independent Petroleum Marketers Association of Nigeria (IPMAN) Mr Chinedu Ukadike attributed the development to the cost of diesel which is currently at N850, non-payment of petroleum equalisation among other issues.
“You also agree with me that the cost of diesel is almost skyrocketing and diesel contributes about 70 to 90 per cent of transportation of petroleum products from these coastal areas to dry areas and for some time now, marketers have been crying that the petroleum equalisation fund was not being paid.
“Diesel is close to N850 per litre ranging from N750 to N850 and if you want to dispatch a truck of petroleum products to Lagos from Abuja, you will spend not less than N150,000 and N200,000 in dispatching the truck just to buy only diesel for going alone. Then coming will also take you also N150,000 so both will take about N350,000 and the Marketers in Suleja Depot is expected to sell at N165 which is government’s approved pump price.
“Marketers are service-oriented but we are also out to make profit,” he said.
On the increase in pump prices by retail outlets, he said PMS is now sold between N158 and N160 in private depots were Marketers are forced to buy because the NNPC’ depots are currently inoperative. He said selling at the government’s approved pump price was no longer realistic.
“We are buying this product from private depots at N158, N159, N160 because NNPC depots have been obsolete for the past four years all the pipelines that they are using to supply products across the country are no longer in existence or have been brutally vandalised.
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“All the refineries are not working. After buying products at N158 added with N10 overhead cost which is almost N170 you will also be expected to sell that product at N165. The problem of insecurity is also making some of these trucks not to travel,” he noted.
However, he said getting the refineries to function by at least 50 per cent will help address the current situation.
Meanwhile, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) said President Muhammadu Buhari has approved the upward review in freight rate for transporters to alleviate the challenges associated with the distribution of Premium Motor Spirit (PMS).
It said the review was necessitated by the upswing in the global price of petroleum products especially Automotive Gas oil (Diesel) and its implication on the cost of transporting Premium Motor Spirit (PMS) nationwide.
In a statement made available to the Nigerian Tribune, the Authority said the transporters’ freight rate has been reviewed to reflect current market realities in line with the mandate of the Authority as prescribed in the PIA (Section 31(i)) to develop and enforce a framework on tariffing and pricing for natural gas and petroleum products.
Although the revised freight took effect on June 1, 2022 Marketers are still required to maintain the current regulated PMS pump price of N165.00/litre.
Meanwhile, NMDPRA said an Inter-agency Team is being constituted to ensure reconciliation and payment of outstanding transporters’ claims in line with established payment procedures under the Bridging Fund Scheme.
“We believe the increase in transporters freight rate will further encourage Nigerian Association of Road Transport Owners (NARTO) and other stakeholders to deploy more trucks to transport PMS nationwide to ensure adequate supply of the product,” it added.
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