Fuel: Buhari rejects marketers’ demand for price increase

THE DEMANDS
Price increase
Total deregulation of petroleum products
Payment of outstanding subsidy

FG’S OFFERS
Creation of special window for Forex from CBN
Presentation of request for payment of outstanding subsidy to
National Assembly
Creating opportunity for the establishment of modular
refineries
No return to era of fuel subsidy

A subtle move by marketers for the federal government to
increase fuel price appears to have failed.

President Muhammadu Buhari is not disposed to the proposal, The
Nation gathered yesterday.

He is also saying No to the re-introduction of fuel subsidy,
sources said.

The pressure on government to effect a rise in petroleum price
from N145 per litre is coming amidst the current acute fuel
scarcity across the country.

Hundreds of thousands of motorists, for the fifth day running
yesterday, kept searching for petrol wherever they could get it at
any cost.

Commuters, many of whom went shopping for Christmas, were made
to pay high fares for transport to their destinations.

Many others had to walk long distances.

Well placed government sources said the administration is
concentrating on finding permanent solutions to the recurring fuel
crisis including checkmating sabotage by some marketers and
stakeholders, and putting all the nation’s 23 depots in 100 per
cent shape.

It was gathered that marketers are still unwilling to import
products because of low or insignificant profit margin.

They are seeking full deregulation of petroleum products.

Key players in the petroleum industry attribute the fuel crisis
in the country to agitation for price hike by marketers, disruption
of the supply chain, and sabotage by some stakeholders to force the
government to deregulate the sector further.

One of the sources said: “The key issue is price war. The
marketers have made representation to the federal government and
the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu to
allow price hike of petroleum products and leave the sector to
market forces.

“The President and senior government officials are however
opposed to price hike because of its spiral effects on the
socio-economic life of the nation. It also has grave political
implications for the survival of the present government.

“In the last few months, the government has been trying to cope
through the Nigerian National Petroleum Corporation (NNPC) until
there was stress in the supply chain following threats by PENGASSAN
and the challenge in Lagos.”

Another stakeholder, speaking on the price war, said: “We import
refined products as a nation. Once the prices of crude increase at
the international market, they have effects on the cost of refined
products being brought into our country.

“The landing cost of Premium Motor Spirit (PMS) is between N165
and N170 per litre. The marketers are claiming that the profit
margin is insignificant and they cannot recover cost, they say they
need to top up prices since they no longer enjoy subsidy.

“Initially, the same marketers said they had subsidy arrears to
collect from the government and they will not import products. The
arrears have not been appropriated for by the National Assembly and
there was nothing the government can do.”

But a government source said: “To mitigate the issues raised by
the marketers, this administration put some measures in place. For
instance, the government created a special foreign exchange window
for the marketers to enable them to import products.

“Instead of using the forex, some of them diverted it to other
use. In order not to hold the nation into ransom by the marketers,
NNPC in the last one and a half years has been importing 99.9% of
products. This sole importation also drains the resources of NNPC
but it has to sacrifice to ensure availability of products.

“And if NNPC imports, it sells to marketers but they are still
complaining of low profit margin. The importation chain has its own
stress because for the storage of the products, NNPC can only
accommodate 55% of the products. The oil majors cater for 30% and
independent marketers take charge of about 15%. So, at any point,
these marketers are still needed.

“The alternative is for all the nation’s 23 depots to be
operating at maximum capacity to check the antics of the
marketers.”

A minister, who should know, also said the government was
suspecting sabotage by some stakeholders.

His words: “Before the present crisis, the nation used to
consume between 30million to 35million litres of Premium Motor
Spirit (PMS) daily but since this current challenge started, the
consumption has shot up to 80million litres per day.

“Without a soothsayer, it is obvious that something had gone
wrong. We cannot just rule out sabotage including diversion of
products.”

THE DEMANDS
Price increase
Total deregulation of petroleum products
Payment of outstanding subsidy

FG’S OFFERS
Creation of special window for Forex from CBN
Presentation of request for payment of outstanding subsidy to
National Assembly
Creating opportunity for the establishment of modular
refineries
No return to era of fuel subsidy

A subtle move by marketers for the federal government to
increase fuel price appears to have failed.

President Muhammadu Buhari is not disposed to the proposal, The
Nation gathered yesterday.

He is also saying No to the re-introduction of fuel subsidy,
sources said.

The pressure on government to effect a rise in petroleum price
from N145 per litre is coming amidst the current acute fuel
scarcity across the country.

Hundreds of thousands of motorists, for the fifth day running
yesterday, kept searching for petrol wherever they could get it at
any cost.

Commuters, many of whom went shopping for Christmas, were made
to pay high fares for transport to their destinations.

Many others had to walk long distances.

Well placed government sources said the administration is
concentrating on finding permanent solutions to the recurring fuel
crisis including checkmating sabotage by some marketers and
stakeholders, and putting all the nation’s 23 depots in 100 per
cent shape.

It was gathered that marketers are still unwilling to import
products because of low or insignificant profit margin.

They are seeking full deregulation of petroleum products.

Key players in the petroleum industry attribute the fuel crisis
in the country to agitation for price hike by marketers, disruption
of the supply chain, and sabotage by some stakeholders to force the
government to deregulate the sector further.

One of the sources said: “The key issue is price war. The
marketers have made representation to the federal government and
the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu to
allow price hike of petroleum products and leave the sector to
market forces.

“The President and senior government officials are however
opposed to price hike because of its spiral effects on the
socio-economic life of the nation. It also has grave political
implications for the survival of the present government.

“In the last few months, the government has been trying to cope
through the Nigerian National Petroleum Corporation (NNPC) until
there was stress in the supply chain following threats by PENGASSAN
and the challenge in Lagos.”

Another stakeholder, speaking on the price war, said: “We import
refined products as a nation. Once the prices of crude increase at
the international market, they have effects on the cost of refined
products being brought into our country.

“The landing cost of Premium Motor Spirit (PMS) is between N165
and N170 per litre. The marketers are claiming that the profit
margin is insignificant and they cannot recover cost, they say they
need to top up prices since they no longer enjoy subsidy.

“Initially, the same marketers said they had subsidy arrears to
collect from the government and they will not import products. The
arrears have not been appropriated for by the National Assembly and
there was nothing the government can do.”

But a government source said: “To mitigate the issues raised by
the marketers, this administration put some measures in place. For
instance, the government created a special foreign exchange window
for the marketers to enable them to import products.

“Instead of using the forex, some of them diverted it to other
use. In order not to hold the nation into ransom by the marketers,
NNPC in the last one and a half years has been importing 99.9% of
products. This sole importation also drains the resources of NNPC
but it has to sacrifice to ensure availability of products.

“And if NNPC imports, it sells to marketers but they are still
complaining of low profit margin. The importation chain has its own
stress because for the storage of the products, NNPC can only
accommodate 55% of the products. The oil majors cater for 30% and
independent marketers take charge of about 15%. So, at any point,
these marketers are still needed.

“The alternative is for all the nation’s 23 depots to be
operating at maximum capacity to check the antics of the
marketers.”

A minister, who should know, also said the government was
suspecting sabotage by some stakeholders.

His words: “Before the present crisis, the nation used to
consume between 30million to 35million litres of Premium Motor
Spirit (PMS) daily but since this current challenge started, the
consumption has shot up to 80million litres per day.

“Without a soothsayer, it is obvious that something had gone
wrong. We cannot just rule out sabotage including diversion of
products.”