Oil marketers in light of the planned removal of fuel subsidy have hinted on likely minimal changes in distribution cost, considering the cost of the product which constitutes 80 percent of the pump price.
This was even as the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and the Nigerian National Petroleum Company Limited (NNPCL) warned Nigerians against panic buying.
In a joint statement signed by Major Oil Marketers Association of Nigeria (MOMAN) and Depot and Petroleum Marketers Association of Nigeria (DAPPMAN) obtained by the Tribune Online, the associations pledged to manage these distribution costs to minimize their impact on the pump price.
While throwing their weights behind the development, the associations said the decision to phase out the fuel subsidy regime was not merely a fiscal reform.
“It is a significant stride toward social justice. We are heartened that the administration plans to redirect these substantial funds towards essential public goods such as infrastructure, education, and healthcare,”the statement partly reads.
They urged Nigerians to avoid panic buying or stockpiling of petrol as this not only creates artificial scarcity but also poses a significant safety hazard.
“We understand the concerns regarding potential price increases. However, we expect marketers to maintain reasonable pricing, as NNPCL remains the sole supplier of the product currently.
“Considering this clarity of policy, we ask our suppliers to continue supplying products to all legitimate marketers. We also urge filling stations to remain open and avoid hoarding products,” they added.
Meanwhile, the NMDPRA in a statement signed by its General Manager, Corporate Communications, Mr. Kimchi Apollo said contrary to speculations and concerns, the announcement is in line with the Petroleum Industry Act (2021) which provides for total deregulation of the petroleum downstream sector to drive investment and growth.
While also assuring of enough supply of PMS to meet demand, it said:”We are working closely with NNPC Limited and other key stakeholders to guarantee a smooth transition, avoid supply disruptions, and ensure that consumers are not shortchanged in any form.”
Also at a briefing, the Group Chief Executive Officer (GCEO) of the NNPC, Mr. Mele Kyari said the decision will free up resources for the Company.
According to him, the subsidy burden which has been placed on the NNPC Limited is affecting the company’s cash flow and threatening its sustainability plans due to the FG’s inability to refund the subsidy claims.
He added that NNPC as a limited liability company cannot continue to bear the burden of subsidy on behalf of the federation if it must deliver dividends to its shareholders and be profitable.
Mr. Kyari assured that the company has over 30 days of PMS storage and supply and appealed to Nigerians not to indulge in panic buying.
He mentioned that the company is in discussion with the Nigeria Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to develop a framework of the implementation of the removal of the PMS subsidy as announced by the President.
“The decision of Mr. President to announce that the subsidy of PMS is over, this has really been a challenge to NNPC’s continued operation. We have been funding the subsidy from the cash flow of the NNPC since the Federal Government is unable to defray the cost of subsidy.
“We believe that this will free up resources for the NNPC for it to continue to do the great work that it is doing for this country and it allows us to continue to function as a very commercial entity.
“We would like to assure Nigerians that we have sufficient supply of petroleum products especially PMS and there is no reason to panic and I understand that people will be scared of the potential changes to the price but that is not enough for people to rush to filling stations to buy more than what they need,” he said.
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