Nigerians At the Mercy of Fuel Marketers’ Price War

The strident calls for the end of the controversial fuel regime in the country, for the umpteenth time, are gaining currency as fuel marketers defied the existing price template for the sale of petrol under a regulated market environment last week. Amidst the pervading indiscriminate price hike, hoarding and the attendant product scarcity, analysts, therefore, believe the best time to withdraw the fuel subsidy regime is now, writes Festus Akanbi

In what looks like a complete breakdown of the regulation of the downstream sector of the Nigerian oil industry, fuel marketers last week began an indiscriminate adjustment of their pump prices in Lagos, Abuja and some other parts of the country, where residents spent several hours combing the cities for petrol.

In the cities, fuel queues curl around entire suburbs like gargantuan metal pythons, growing longer and fatter by the day, choking roads and crushing livelihoods.

Stunned by a combination of indiscriminate pricing and product scarcity, Nigerians wondered why the federal government is still finding it difficult to end the controversial policy of fuel subsidy blamed for the pervading confusion in the Nigerian oil sector.

Defiant Marketers in Price War

THISDAY investigation showed that while some petrol stations were bold enough to reflect the new price on their dashboards, others retained N165 as the price for a litre of fuel whereas the new price is disclosed to the prospective buyers at the point of sale.

For example, at Nice Filling Station, opposite Mobil Fuel Station along Lambe-Akute road, in Ifo Local Government Area of Ogun State, a litre of fuel was sold for N230 and this was conspicuously displayed on the dashboard for most of last week.

Our correspondents gathered that some filling stations in Lagos sold petrol to motorists at N200/litre and still had queues, as black marketers dispensed the product at N300/litre.

In Abuja, Khalif Filling Station in Kubwa dispensed the commodity at N250/litre on Sunday but had N165/litre displayed on its pumps. But once a motorist tells the fuel attendant the amount he or she wishes to buy, this would be calculated based on N250/litre.

Industry sources described the current scarcity in major towns and cities as a deliberate action of some marketers who are bent on forcing the regulators to approve an increase in price as a result of a corresponding increase in the cost of transporting the product to the various marketing outlets.

Sometimes in January this year, oil marketers expressed their determination to escalate their call for an increase in the pump price of petrol, to the federal government, as the current cost of the commodity was no longer sustainable.

Speaking sometime in January this year, the Deputy National President, Independent Petroleum Marketers Association of Nigeria, Zarma Mustapha told newsmen that the federal government had been put on notice concerning marketers’ intentions to increase petrol prices.

“The current pump price is no longer sustainable and we have made this known to the government. However, we must acknowledge the efforts of the Nigerian National Petroleum Company Limited in ensuring product availability,” he stated.

Adjusting to Current Reality

Also, the National President, Natural Oil and Gas Suppliers Association, Bennett Korie, said Nigerians would have to adjust to the current reality, as it was no more feasible to dispense petrol at the approved rate of N165/litre in filling stations after purchasing the product for about N170/litre in some private depots.

Analysts believe the call for a new cost-reflective price regime was to prepare the minds of Nigerians for the current pricing, hoarding and product diversion with their attendant strains on businesses although oil marketers denied claims of product hoarding or diversion, as they stressed that the insufficient supply of petrol by NNPC and the non-payment of bridging claims for the transportation of petrol were the key reasons for the scarcity.

Insufficient Supply

The President, Petroleum Products Retail Outlets owners Association of Nigeria, Billy Gillis-Harry, was quoted as saying that filling stations that had products were dispensing, while those that were shut had no petrol to sell.

He said, “The problem is that every side needs to be transparent. We as retail outlet owners are ready to sell petroleum products to the teeming Nigerian public. We have no reason why we should not sell our products.

“The money used in buying the 45,000 litres of petrol from depots, almost N7million, is borrowed, and time-bound. So every retail outlet owner knows that the wise thing to do in this business is to sell out and try to turn around that sale as many times as possible.

“So with this scenario in view, there is no retail outlet owner that is hoarding product or diverting it. Yes, we know there may be bad eggs among the good bunch, but the fact that we are not having sufficient products is what has remained the cause of fuel scarcity.”

Gillis-Harry added, “In the case of Abuja, it is clear to understand that if the bridging claims are paid to marketers, they will be able to continue their products’ purchase cycle. That is just the reality. So payment of bridging claims is an issue and insufficient supply is also another issue.

“This is because if there is enough product and there is money for us to buy, then why won’t we buy and sell? What else are we in business for? Are we going to buy products and keep them? The answer is no! So this is the reality.”

While marketers are blaming the current scarcity of petrol on the insufficient supply of products by the Nigerian National Petroleum Company (NNPC) which is the sole importer of petrol into Nigeria for several years running is claiming it has enough products to keep the country wet for months.

Double Jeopardy

Analysts described the current scenario in fuel supply as double jeopardy in a country that spends virtually all its earnings from the sale of its crude on fuel subsidy. “What it means is that fuel marketers are collecting subsidies from the government and they are also making a kill of the process by selling above the regulated prices. The only way to stop this orgy of corruption is to quickly end the subsidy programme and allow the market to determine the product’s price,” argued Mr Lawson Ajeigbe, a Lagos-based energy analyst.

He added, “Nigerians are been pushed into a situation where they will openly canvass for price increase as long as the products are available. The logic is simple, now that petrol is being sold at an exorbitant rate, it wouldn’t make any difference if the subsidy is removed since the people are already getting used to higher pump prices.”

Reacting to the continuous face-off between the federal government and marketers, industry analyst and former Group Chairman/CEO, International Energy Services Limited, Dr Diran Fawibe, said the issue of fuel supply appeared to have defied solutions.

“Everybody is throwing figures about costs and prices to sell and what not to sell. At the end of the day, it’s the consumers that will bear the brunt. What we have noticed is that prices vary from station to station, and from state to state, and obviously, that’s what the bridging payment by the Federal Government was supposed to address”, he said.

The National Operations Controller of the Independent Petroleum Marketers Association of Nigeria, Mike Osatuyi, however, debunked allegations that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) and marketers secretly agreed to increase the price.

“That’s not true. There is no letter to that effect from NMDPRA,” he said.

However, when asked why the fuel price was rising, he said it was due to the hike in the price of diesel.

“Those stations you see that sell above N165 do so because they have to recover their costs,” he said.

Foremost lawyer and human rights activist, Mr. Femi Falana, a Senior Advocate of Nigeria, was quoted as challenging the federal government to rise to the occasion instead of making Nigerians bear the brunt of the current problems in the oil industry.

According to him, “If those refineries are not working, if new refineries have not been built by the government, if we now have to import fuel from abroad including from African countries that do not produce oil, there can be no justification for visiting the irresponsibility of the government on the Nigerian people.

“Again, what do you call subsidy? The government claims that smugglers are moving litres of fuel from Nigeria to neighbouring countries. Again, do you blame the Nigerian people, if the government cannot curb the criminality of smugglers?.. the government has swallowed hook, line and sinker the neo-liberal policies dictated by IMF and the World Bank, whose implementation has continued to pauperise the Nigerian people.”

The current administration must end the fuel subsidy regime to free the economy from the burden of a system that is not only draining the meagre foreign exchange earnings but also giving corrupt businesses and public office holders the opportunity from milking the generality of the people.

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