NNPC petrol price without subsidy is N400/litre – Marketers explain the reason for fuel scarcity

If there is no subsidy, it has been learned that the Nigerian National Petroleum Company Limited can supply Premium Motor Spirit, also known as gasoline, to marketers for as little as N400 per litre.

Oil marketers, who disclosed the information on Sunday, provided additional justifications for the ongoing petrol shortage that had resulted in the protracted lines at filling stations nationwide.

They claimed that the Nigerian National Petroleum Company Limited, the only importer of the good, was finding it increasingly difficult to pay the PMS import charges and revealed that the NNPC had been subtly pressuring depot owners to pay them.

It was discovered that depot owners, on their part, were also transferring the fees to filling stations, which in turn pushed it to the product’s final users. This event caused the price of the commodity at the pump to climb.

Additionally, it was learned that the Federal Government had covertly permitted depot owners to increase the ex-depot price of gasoline from the previously sanctioned amount of N147/litre to around N185/litre.

This occurred on Sunday as the gasoline shortage persisted. Abuja’s retail establishments were forced to close because there were no goods to sell. Locals were forced to turn to black marketers who offered their goods in jerrycans.

The same situation occurred in parts of the states of Nasarawa and Niger, and oil marketers explained that the rise in the dollar was also a factor in the scarcity of PMS that had been observed in Nigeria.

“The dollar is affecting PMS purchase, something you were buying for about $15/tonne when the dollar was about N440 to N450, but currently the dollar is about N750 to N800. Definitely the price of the product will increase,” a major marketer, who pleaded not to be named due to lack of authorisation, stated.

The official added, “You can buy a product, say $10/tonne from maybe Russia, it will get to Nigerian waters at that rate, but most of those mother vessels, as soon as they discharge into your own vessel, whatever rate you now pay will be international rates in dollar.

“The mother vessel has its limit, it has to be stationed at Atlas Cove. But the daughter vessel you are going to charge, which brings in the product, will be charged in dollars. They don’t take naira. So all these charges come in dollars.”

The source stated that these charges were currently hitting hard on the NNPC, as the oil company was finding it tough to bear the increased fuel imports rates.

“All vessels operate on international rates and it must be in forex. So as it is now, the rates are getting so high for NNPC to bear alone. Some of these charges have to be pushed to depots that are taking the products and they have to pass it on to consumers,” the oil marketer stated.

The source added, “The subsidised ex-depot rate for petrol from NNPC is about N147/litre, but tell me, which depot is selling at that rate today? I know somebody who said he bought from a depot at N182/litre. And he got it at this rate because he did bulk purchase, he bought about 20 trucks.

“And he bought it from one of the major marketing companies. So when you make a bulk purchase at N182/litre, then you can imagine what those who are buying one or two trucks will have to pay for the product.

“This means that there is hardly any depot you can go to now that you can get products for less than N185/litre. And by the time you buy at N185/litre at the depots, why won’t they sell at N200/litre and above?”

This development was confirmed by the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, Chief Ukadike Chinedu, who stated that NNPC was currently finding it tough to continue subsidising PMS.

“The least that NNPC can sell petrol is over N400/litre to depots and not at N145/litre, but because of subsidy, which is becoming over-bearing on them, the oil firm has been struggling to subsidise,” he stated.

He added, “That is why you see the lapses. The government is looking for dollars to import this product and pay the contractors importing for NNPC, and it is also trying to subsidise PMS.”

Ukadike explained that the landing cost of PMS in Nigeria was about N450/litre, as he noted that subsidy on PMS was no longer sustainable.

“The government will not continue to be Father Christmas and cripple the economy. Subsidy must stop!” he stated.

Garba-Deen Mohammad, Group General Manager, Group Public Affairs Division, NNPC, did not reply to questions when reached. In actuality, the NNPC has said nothing about problems with fuel scarcity.

Similarly to this, when contacted, the Nigerian Midstream and Downstream Petroleum Regulatory Authority, which oversees the downstream oil industry, remained silent.

Like NNPC, the NMDPRA has been silent on this issue since last week. Due to a lack of product and long lines outside of stores, the federal government’s agencies have decided not to discuss PMS’ price.

According to Billy Gillis-Harry, president of the Petroleum Retail Outlet Owners Association of Nigeria, the crisis in the downstream oil sector would last until the business is deregulated.

“We have stated it countless times that this issue will drag on as long as there is a subsidy on gasoline, which by all accounts is no longer viable. The best course of action is to halt it,” he said.

Ukadike also emphasized that the Federal Government’s resources, in addition to those of NNPC, were being taxed by the ongoing payment of gasoline subsidies.

It is getting more and more difficult for them,” he remarked.

“In actuality, it is negatively affecting the economy in general. Even the federal government is powerless to control it.

Therefore, the ideal course of action is to simply let people get used to the non-subsidy system so that the pressure on the dollar may be released and the government can then invest in other industries.

“All of these problems, including the subsidy system, are factors in the nationwide scarcity. Why won’t there be scarcity when the naira is falling against the dollar, there is less of a supply of goods, and the government and NNPC are fighting to subsidize gasoline?”

Subsidy gulps N6.88tn

According to a report from last month, from the time it came into office in 2015 until May 2023, the government of Nigerian President Major General Muhammadu Buhari (ret.) could spend up to N10.976 trillion on gasoline subsidies.

Using information from NNPC and the Nigeria Extractive Industries Transparency Initiative, the investigation revealed that the government had already spent almost N6.88 trillion subsidizing gasoline.

While running for office in 2015, the President and his party, the All Progressives Congress, had, however, railed against the fuel subsidy program that had been put in place by the Peoples Democratic Party’s prior administration.

Petrol was subsidized throughout these years, according to NEITI, which had said this in a report filed in September to the House of Representatives ad hoc committee looking into the fuel subsidy regime from 2013 to 2022.

Zainab Ahmed, the minister of finance, budget, and national planning, informed the House of Representatives in October that the federal government anticipated spending N6.72 trillion on subsidies in 2023.

She said, however, that the government’s second option was to maintain gasoline subsidies through June 2023, and that the expected cost of this option was N3.3 trillion.

Combining the aforementioned numbers, it was determined that the Buhari administration could spend no less than N10.976 trillion on gasoline subsidies between 2015 and June 2023.

IPMAN laments scarcity

It was reported by Mike Osatuyi, National Controller, Operations, IPMAN, that the organization’s members were still lacking the product and that the few filling stations that did have PMS were charging between N230 and N240 per litre.

“We lack products since we were unable to secure purchases. Depots don’t currently have any merchandise, the man added.

He claims that IPMAN currently has over 30,000 members nationwide and owns 70% of Nigeria’s retail establishments.

“Our members are in the villages and outskirts. Go everywhere, you will see our stations”, Osatuyi added.
A Depots Association of Petroleum Products Marketers Association of Nigeria source who pleaded anonymity said its members had paid for products but were not getting any from NNPCL.

“We have people who have paid but were not given. But the NNPC would say it has stock. Where is the stock and why don’t we have products in our tanks?”

The Chairman, IPMAN, Lagos Satellite Depot, Ejigbo, Akin Akinrinade, had said members of the association ought to be getting supply from the Pipelines and Product Marketing Company.
He said members had made payments in excess of N1bn since October 2021.

He however said the products were yet to be delivered, forcing members to patronise private depots for products while at the same time, servicing loans borrowed from banks for their money with PPMC.

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