…As Nigerian govt reverses self on petrol ‘subsidy’, but denies it***

The Depot and Petroleum Products Marketers Association( DAPPMA), on Tuesday expressed concern over the inability of Nigerian National Petroleum Corporation (NNPC) to send petrol to its members’ depots.

DAPPMA’s Executive Secretary, Olufemi Adewole, in a statement in Lagos, urged NNPC to help the association so as to alleviate the suffering of Nigerians.

“Our members’ depots are presently empty. However, if the PPMC/NNPC can provide us with petrol, we are ready to do 24-hour loading to alleviate the sufferings of Nigerians and for the fuel queues to be totally eliminated.

“We, petroleum products marketers, do empathise with all Nigerians who are going through difficulties at this time by spending hours on fuel queues because of the current fuel scarcity due to no fault of theirs.

“DAPPMA members import about 65 per cent of the nation’s total fuel consumption, Major Oil Marketers Association of Nigeria (MOMAN) imports about 15 per cent and PPMC/NNPC import the balance of 20 per cent.

“However this scenario changed drastically due to several challenges faced by marketers,’’ he said.

The DAPPMA official claimed that their members pay PPMC/NNPC in advance for petroleum products.

He said fully paid-up petrol orders which have neither been programmed nor loaded is in excess of 500,000MT (about 800,000,000 litres).

“As at today, there is enough petrol to meet the nation’s needs for 19 days at a daily estimated consumption of 35,000,000 litres.

“Sadly, some people have blamed marketers for hoarding products. Unfortunately, this is far from the truth.

“Hoarding is regarded as economic sabotage and we assure all Nigerians that our members are not involved in such illicit act.

“While all kinds of allegations have been made in the media, it is important to set the records straight, as Nigerians first, and as responsible business men and women who employ Nigerians.

“As it stands today, NNPC has been the sole importer of PMS into the country since October,’’ Adewole said.

He said the current import price of petrol is about N170 per litre, with NNPC, which absorbs the attendant subsidy on behalf of the Federal Government, as the importer of last resort.

“The international price of petrol went up during the period of Hurricane Katrina and it has not dropped below USD$600/MT since then.

Mr. Adewole said the exchange rate of the dollar to the Naira is N306 for petrol imports and the interest rate Nigerian banks charge is above 25 per cent.

“Landing cost of PMS in Nigeria is above N145 per litre which means any of our members that imports will have to resort to subsidy claims, a policy already jettisoned by the government.

“It is on record that any time NNPC assumes the role of sole importer; there are issues of distribution, because it is marketers who own 80 per cent of the functional receptive facilities and retail outlets in Nigeria.

“While we cannot confirm or dispute NNPC’s claim of having sufficient product stock, we can confirm that the products are not in our tanks and as such cannot be distributed.

“If the products are offshore, then surely it cannot be considered to be available to Nigerians,’’ he said.

Adewole however assured that fuel marketers remain committed to the progress of the nation and its citizenry as therein lies their own profitability and fulfilment.

In the meantime, despite its own admission that the landing cost of imported petroleum products has exceeded approved retail pump price, the Nigerian National Petroleum Corporation (NNPC) still claims the government has not been paying subsidy on petrol.

The government says it has been making for “extra cost” for months, but denies paying petrol “subsidy” which it stopped in 2016.

The Buhari administration announced the removal of petrol subsidy in 2016, and imposed a pump price increase to N145 a litre as the then new government tried to distance itself from the misdeeds of past governments.

The government said it would channel its resources instead into getting the refineries up, and save the trillions of naira past governments squandered on fuel subsidy payments.

But it seems the Buhari government, soon after persuading Nigerians to accept the petrol pump cost raise as the price for scraping subsidy, quietly went behind and continued with the same subsidy policy of its predecessors.

The NNPC has not given details how the cost is covered. But such cost would amount to billions of naira, and would imply the government redirected resources that would have gone into developmental projects into paying subsidy — the same policy it criticised other governments for.

It is not clear where the monies were sourced from, since budgets for 2016 and 2017 had no mention of subsidy appropriations.

The NNPC Group Managing Director, Maikanti Baru, stirred controversy on Friday when he disclosed that the official landing cost of petrol has for months been about N171.40 per litre.

By implication, Mr. Baru, who was speaking at the end of his monitoring tour of filling stations in Abuja on Sunday, was admitting that the government was bearing an extra cost of about N26.40 for its decision to keep retail pump price of petrol intact at N145 per litre.

But, Nigerians have read insincerity into Mr. Baru’s disclosure, particularly about the government’s refusal to make official pronouncement on the issue of subsidy component in NNPC fuel supply cost, having declared at inception it was removed from the official petroleum products pricing template.

However, asked to confirm whether subsidy was restored in the country’s fuel pricing template without a formal announcement by government, NNPC spokesperson, Ndu Ughamadu, was emphatic in his denial, in a telephone chat with PREMIUM TIMES in Abuja.

“No! No!! No!!” Mr. Ughamadu said. “The GMD was very clear on the issue. He never talked about government subsidy. If you check the budgets for last year and this year, there was no appropriation for fuel subsidy. So, how can we be talking about subsidy? What we have is extra cost.

Asked to explain the N26.40 price differential between the fuel landing cost of N171.40 per litre and retail pump price of N145 per litre, the NNPC spokesperson said although the corporation has been subsidising the fuel price, “we cannot talk about it officially, because it is not the same thing as government subsidy, which is always appropriated in the budget by the National Assembly.”

“As I have always said, NNPC has a critical role to play in products distribution and supply in the country, not only as a commercial entity and importer of last resort, but also as ‘social supplier’, to ensure that the system gets wet all the time,” he said.

But, a senior official of one of the products marketing associations in the country, who requested anonymity because of the sensitive nature of the issue, was emphatic that subsidy had been back in fuel pricing lexicon for several months.

“There is subsidy,” the official told PREMIUM TIMES on Tuesday in a telephone interview. “For many months, products have been landing at costs higher than N145 per litre. So, subsidy has always been in the market place.

“But, there is no provision for subsidy in the budget. How the subsidy is recovered is government’s business, since the NNPC has been the only one that was importing. All that concerns us is that we buy at NNPC at N133.80 per litre and sell at N145 per litre.”

On how the current fuel supply crisis, which has given Nigerians one of the bleakest Christmas celebrations in recent times, the official traced its roots to October 2016, when NNPC products suppliers began to deliberately default on their contract deliveries.

He said during the winter months, which usually coincided with the Christmas period in Nigeria, European fuel suppliers consider producing diesel more profitable, because of their need for heating, than petrol, a situation that creates shortage of supply for petrol.

“Prior to the winter season, contracts for fuel supplies are given at ‘winter premium’, which consists of cost of product plus $6 profit. With that, the suppliers would make all the profits in the summer months, and in the winter, which they consider unprofitable, they will deliberately decide not to supply products, because the premium is very low,” he explained.

He said the refusal of the NNPC suppliers to meet their contracts resulted in a huge shortfall, despite assurances by the state oil company that it was building a healthy stock of products to take care of the usual increased demand by consumers in such festive seasons.

However, the official said the situation worsened in the run up to Christmas, because NNPC, for almost a year, remained the sole importer and supplier of petroleum products in the country.

“If there were other private importers, they would have imported to fill the gap. But, when the shock in supply shortfall came, there was no shock absorber, and everybody was exposed,” he said.

He expressed confidence that the situation was going to improve significantly in the next couple of days, as the NNPC has not only stepped up efforts to stock up products, but has also encouraged other marketers to join in importing fuel.

“The NNPC has now increased its premium from $6 to over $20, making it very attractive for other marketers to agree to jump in and import with NNPC. They have agreed to flood the market with products within 24 hours,” the official said.

The national president, Independent Petroleum Marketers Association of Nigeria, IPMAN, Chinedu Okoronkwo, said the differential in prices between landing cost and pump price “cannot be subsidy, but price modulation.”

“Whatever is the price differential between landing cost and retail pump price, government knows how to cushion it. That’s why we have government. Whether it is subsidy or price modulation, does not matter now.

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