He maintained that the Dangote Refinery would help the nation in two ways, adding that “the refinery will give Nigeria easy access to petroleum products on-land for security reasons, because it is within the Nigerian territory. Secondly, it will increase employment for our professionals.”
Oil marketers have projected that the ex-depot price of Premium Motor Spirit, popularly called petrol, would hit N515/litre once they source foreign exchange rate at the parallel market for the importation of PMS.
Ex-depot price is the price marketers buy products at the depot and it determines the price at which they sell to motorists at filling stations.
Dealers under the aegis of the Independent Petroleum Marketers Association of Nigeria called on the Federal Government to provide opportunity for marketers to start importing petrol by enabling dealers to have access to foreign exchange.
Currently, the Nigerian National Petroleum Company is the sole importer of PMS into Nigeria, as other marketers stopped importing the commodity due to their inability to access the United States dollar.
Marketers also stated that the ex-depot price of petrol by NNPCL Retail was currently N467.39/litre, and explained that this was because the national oil company was sourcing its dollars at a cheaper rate.
“The exchange rate of N761/$ at the parallel market is what we are battling with as I’m talking to you right now, because that is where most marketers source their dollars. NNPCL’s ex-depot price is not realistic for other marketers, because they (NNPCL) source their dollar cheaper, which is at the N461/$ CBN rate.
“So if any marketer is importing today, the cheapest ex-depot price that has been calculated for us is not less than N505/litre; some are as high as N511/litre, while others are as high as N515/litre,” an oil marketer, who pleaded not to be named to avoid victimisation, stated.
Asked whether marketers had started importing PMS, the source replied, “We have not started. NNPCL is still supplying and they are asking us to come and pay the difference between the old price that they gave us, and the new price that they want to sell to us. Now they are selling to us based on the deregulated price.”
Oil marketers stated that if the NNPCL should continue to access forex cheaper than other marketers, it would not be fair to private dealers, stressing that it was better everyone accessed the dollar at the same rate.
Asked to state what was the ex-depot price of NNPCL, the source replied, “it is N467.39/litre, and that is for NNPCL Retail.”
Let marketers import fuel, says IPMAN
Ukadike called on the government to give oil marketers the opportunity to start importing petrol, since the commodity was now deregulated.
Although he identified the lack of the United States dollar as a challenge, the IPMAN official argued that the government should allow marketers to access the foreign exchange the same way it was being accessed by the NNPCL.
Also, with respect to the cost of PMS and its imports, the Nigerian Midstream and Downstream Petroleum Regulatory Authority announced that it was no longer going to fix the prices of petrol, or release templates for the commodity, rather this would be done by marketers.
“The NNPCL is importing and has not given people the opportunity to join them in importing, so as to see whether private sector operators can import the product cheaper or not. So there is no competition. In a deregulated regime, there must be competition, everyone with capacity should be allowed to import,” Ukadike stated.
When asked whether other marketers would now resume imports since the government had finally deregulated petrol price, Ukadike replied, “Marketers can import, but let me tell you some of the factors militating against this. The first is that there won’t be availability of dollars.
“You will source your dollar from the parallel market and if you are not careful in doing this, and you go into the importation of petroleum products, you might not come out of it alive at the end of the day.
“So what we are saying is that those advantages that NNPCL has, should be shared with other major importers of petroleum products. If it is through crude buy-back, they should let us know, so that independent players such as IPMAN members, can gather to pay and be able to use it in the buy-back model.
On whether this was possible, he said, “If it is not possible, what are the incentives the government is giving to us to boost petroleum products imports and drive competition?
“For independent marketers, the most important thing is that there should be availability of petroleum products, and the government should open up the space for importers and investors to come in.”
Major marketers react
Meanwhile, some members of the Major Oil Marketers Association of Nigeria also said access to dollars remained the challenge and that marketers who wanted to import already had the licence.
The immediate past chairman of MOMAN, Mr Adetunji Oyebanji, who is the Managing Director, 11 Plc (formerly Mobil Oil Nigeria Plc), said, “As an operator in the industry, we welcome the idea that import licenses would be granted. The truth of the matter is that they never really stopped granting import licenses. The only reason people could not make use of them was because they did not have access to foreign exchange at the same rate the NNPCL had.
“That means if one wanted to import fuel and one’s rate was higher than what NNPCL was getting, then obviously, one would not be able to compete when one brought in the product. So, the truth is that we would come back to the market if we have access to foreign exchange at the same rate the NNPCL has.”
He said if other people could import the product, it would remove the NNPCL monopoly and make fuel readily available. “But, issues around access to forex are not really clear. This is because, in the past, the CBN governor has said he didn’t have any forex to give us. We wish they changed that situation and improved the structure,” he added.
Similarly, a highly-placed source in MOMAN said, “We never had a problem with import licenses. I think there was a breach in communication to the general public. That importation is open to anybody who can import fuel, the industry knows that that is half of the story. The other half of the story is around the FX issue.
“If I were to look at it from their point of view – and I am not holding brief for either the NNPCL or NMDPRA – they have both spoken within the scope of their offices. The FX issue is not really theirs to solve. That is a ministry of finance issue and a CBN policy issue to solve. In a way, if you are to take them exactly by what they said, they have spoken like government persons.
“The other piece is to hear from the CBN governor or the ministry of finance to understand how that will be dealt with. I think what the NNPCL has control over is crude oil, not FX. It is that crude oil that is being traded, and in the accounting, when they are working out the subsidy account, they use the official rate.”
He said unless there was a policy shift that would allow credible persons that have importation licenses and have proven track record in fuel importation to have access to crude, which they could use to generate the FX that they needed, many marketers might not embrace the idea.
He added, “The reality of the matter is that there is an uneven playing field because of the access to crude. NNPCL is more advantageous in terms of importation and that is why it is happening, and the other players don’t have the same opportunity to import. There is a dominant player in terms of importation.”
When asked what he felt could be done, he said, “The first thing is to give a percentage that, for example, MOMAN members could import this particular percentage. I think we need a framework that really shows the build-up cost for everything. We need to make it in a way that NIMASA, NPA and all other charges are transparent to all the players.”
“One of those charges is paid in dollars. That increases the cost of bringing the product in. The jetty you deliver to, the port you deliver to also matter. The system has to be transparent by creating equal opportunity. The regulators should be clearer with these things, else the operators won’t be able to compete.
Fixing petrol prices
As oil marketers made their demand to start PMS imports, the NMDPRA explained that it would no longer fix prices or release templates for petrol.
The Chief Executive, NMDPRA, Farouk Ahmed, explained in a statement that under the liberalised market, market forces were allowed to dictate prices.
He said, “We put the regulation in place, we make sure quality control is complied with, we make sure the product is there and we give licence to a prospective importer.
“The market is now open for everybody that wants to import as far as they meet all the requirements. So, it is not about the NNPC alone. For everybody in the sector, we make sure we guide their operations whether at the depot or wherever the product.
“But we will not put a cap to say this is what the price must be. As far as we are concerned in the NMDPRA, this is not like before when the PPPRA (Petroleum Products Pricing Regulatory Authority) fixes the price. In a deregulated market, it is the market force that dictates the price.”
Ahmed explained that the NNPCL’s role was to fix the prices of the petrol it imported and not take over the responsibilities of the NMDPRA.
“In the case of the NNPC, the organisation is the sole importer at this point. We told the NNPC to recover its costs because they know how much it cost them to import the product and sell it. Of course, we also know how much shipping, offshore, ex-depot and ex-pump are. But we cannot tell them to sell at a price because the market is deregulated,” he said.