Abuja, Nigeria – Nigeria oil authority, Nigerian National Petroleum Company Limited, says it cannot maintain a pump price of N170 per litre for Premium Motor Spirit, popularly called petrol.
The Group Managing Director, Mele Kyari who revealed this at the Legislative Transparency and Accountability Summit in Abuja, explained that the landing cost of fuel was thrice the amount, which has made “it is not possible for you to buy fuel at N170 when your actual cost is thrice that value.
“For instance, today, when PMS comes into this country, we transfer to marketers at N113 per litre for us to ensure N165 at the pump.
“So, you must sell at N113 to them to be able to deliver at N165, that means whatever the cost, anything after that value; that is subsidy. Somebody has to pay for it.
“Everyone knows the price of PMS around the world. There is nowhere today that you can land a litre of PMS to the pumps at the N445 (to a dollar) exchange rate. It is not possible.
“In some places, you are subsidising up to N290 on every litre. With this regime, it is impossible for you to avoid all the wrong things that are happening – round tripping, cross-border smuggling, document forgery.
“Anywhere you have arbitrage, you will have these issues. As long as arbitrage is there, you will continue to have these issues and you cannot hold NNPC accountable for it because it is a value chain that involves everything and everybody.
“You cannot price it at the market today because of the socio-economic impact on the prices of PMS. Every country is doing something about high energy costs. Some have removed taxes on petroleum; this is a subsidy. NNPC Limited will no longer go to FAAC because we are expected to pay taxes, dividend and royalty.”
Kyari further justified the engagement of private security contractors to secure its facilities in an effort to fight against oil theft in the country, saying it has paid off.
The GMD also stated that he has been receiving death threats over the reforms he was spearheading in the oil and gas industry.
Kyari further stated that he was not deterred by the threats.
He said, “Without mincing words, I want to say that this industry is at a threshold of change.
“There is massive change going on and it is very expensive and of personal cost to many people, including myself. There is a threat to life; I can say this.
“I have several death threats but we are not bothered about this. We believe that no one dies unless it is his time.
“But this is the cost of change. When people move away from what they are used to, to something that is new; that will take away value and benefit from them, they will react.
“That reaction is of benefit to all of us and we will work together to make sure it works out.”
Petrol Will Cost N410
Mele Kyari warned that without the current subsidy on petrol, the actual importation and retail cost would be at N410 per litre as market conditions take price to thrice of N170 pump price..
The cost of petrol had risen to as high as N200/litre at depots since last week, stating that PMS cost, which was about N178 to N185/litre was jerked up by private depot owners due to the drop in supply by the NNPC, among other operational concerns.
The petrol scarcity and queues have continued on Wednesday with fewer vehicles plying the city roads.
Fuel Scarcity: Forex Crisis, Illegal Levies Hindering PMS Supply
The Depots and Petroleum Products’ Marketers Association of Nigeria has revealed that unauthorised fees, levies and inability to access foreign exchange by dealers, are the issues hindering the supply and distribution of Premium Motor Spirit popularly known as petrol or fuel.
DAPPMAN Chairman, Winifred Akpani, said, the burden of sourcing forex through the parallel market for transactions domiciled in Nigeria had left petroleum marketers in “dire straits.”
“Accessing dollars for operations has been an insurmountable hurdle for petroleum marketers. The difference between the Central Bank of Nigeria exchange rate and the parallel market exchange rate continues to get wider by the day,” she said.
Akpani noted that in addition to core operational expenses that were denominated in dollars, petroleum marketers were also contending with sourcing funds from the parallel market to pay for fees and levies that were charged in dollars.
She said, “For example, to charter a vessel to convey 20,000 metric tonnes of PMS within Nigeria for 10 days, freight charges are denominated in dollars, that comes to about N220m at the official forex rate of N440, and a whooping N440m for petroleum marketers who have to source forex from the parallel market at N880.
“This implies an additional cost of N11 per litre for this transaction due to the forex official/parallel market differential.”
She stated that for the same transaction, jetty fees, also charged in dollars, amount to N15m at the official forex rates and N31m for petroleum marketers who source from the parallel market.
She said jetty berth was charged in dollars and amount to N2.2m at official forex rate, and N4.4 million at the parallel market rate.
Akpani said port dues were charged in dollars by the Nigerian Ports Authority and Nigerian Maritime Administration and Safety Agency, as she put the amount at N71.5m at the official foreign exchange rate and N143m for marketers who source forex from the parallel market.
On unathorised fees and levies, Akpani said marketers had to pay between N10,000 and N15,000 at toll gates erected at borders before tanker drivers could be allowed to deliver petroleum products to each state of the federation.
She also listed different union charges as part of the unauthorised fees and levies the marketers had been made to pay for over the years.
Akpani called on the government to establish a level playing field in the sector by giving petroleum marketers access to forex at the CBN exchange rate.
“This is a passionate appeal to the government as we can confidently state that accessing forex through the CBN window will significantly enhance capacity and facilitate seamless supply of PMS and birth a regime of sustainability in terms of storage, distribution and supply across the nation,” she added.
The Nigerian National Petroleum Company Limited, which serves as supplier of last resort, is now the major company that has full access to the dollar at the official rate.
Other independent marketers have to source for forex at the black market. The NNPC also has access to products through swap arrangements.
Akpani decried the absence of a level-playing field that guarantees access to forex for all marketers at official rates, noting that having NNPC as the sole importer of PMS was not sustainable, considering the huge consumption of the product.