The Nigeria downstream petroleum industry has always encountered dangerous or bad situation and so volatile and constantly sucked into a vortex of despair.
The current round of hardship experienced by motorists to get petrol which has disrupted the transport subsector began late in 2022 and heightened this year and almost threatened the crucial part of the general elections.
As the nation, gets set for the last lap of the elections, there is palpable fear of major distribution crises.
Already, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), which regulates the sector, has admitted patches of negligence.
The agency, which is waking up to realise this, said it is working with other stakeholders to mitigate the slight tightness being experienced in the distribution of Premium Motor Spirit (PMS), also called petrol.
The authority’s chief executive, NMDPRA made this known in a statement recently. He said, operations in loading depots have fully resumed, following the restriction of movements during the recently concluded Presidential and National Assembly elections, which necessitated truck drivers to travel to exercise their civic duty.
The chief executive said the public should take note that the current stock sufficiency stood at 35.39 days for PMS, 34.86 days for Automotive Gas Oil (AGO) and 31.36 days for Aviation Turbine Kerosene (ATK).
“The authority continues to strive towards guaranteeing supply and distribution reliability nationwide and strongly advises against panic buying,” the ACE said.
Marketers’ Reactions
While the agency is battling hiccups in the distribution structure, marketers have said that only deregulation of the downstream oil industry will engender competition and address pump price inconsistencies and arbitrary hike and smuggling by a few operators in the industry.
The marketers reacted to investigation by the NATIONAL ECONOMY which revealed that petrol still sells above N200 per liter in some parts of Lagos and other parts of the country even after the Nigerian National Petroleum Company Limited(NNCL), obliged the request of Independent Petroleum Marketers, for direct supply of products.
Before now, independent marketers sourced products from third party operators in the industry, while Major Marketers enjoyed credit facility and direct product supply from the NNPCL which they claimed was responsible for widen gap in pump price in the market.
Although, the Independent Petroleum Marketers Association of Nigeria(IPMAN) said that there ought to be a uniform pricing structure after the NNPCL intervention, NATIONAL ECONOMY finding showed that some operators especially among the independent marketers sell above agreed pump price of between N185, N210 depending on the region.
A visit to some of the filling stations at Lagos-Ibadan express road revealed that some filling stations are selling above N185 per litre. One of such filling stations is Heyden, which is selling at N195 per litre.
Also, at Lekki freezone areas, the price of some marketers range from between N200 to N250.
Only filling stations like Total, Mobile and NNPC etc that are selling at the price of N185 per litre, a resident in that area, Mr Tony Agbejo told NATIONAL ECONOMY, adding that, others are selling as high as N250.
“The reason we patronise them, is because there is no queue. We just drive in and drive out. However, there is also queue at the big filling stations like Total and Mobile that sell at N185 per litre,” Mr Agbejo stated.
In Maryland, a newly opened outlet, TIMAC, boldly displays its pump price for N230 per liter.
Major marketers operating at the Sango-Idiroko expressway are selling fuel between N190- N200 per litre.
Also, fuel queues have failed to disappear on these routes because the marketers prefer selling to smugglers who come with kegs, jerrycans to buy up Premium Motor Spirit (PMS), thereby, making it difficult for other customers to get fuel.
Due to this act, customers spend two hours on queue as the filling staions are mostly populated by smugglers who buy in large quantity for onward smuggling to neighboring Benin Republic.
At Abule-Egba area of Lagos, Major marketers are complying with the new fuel pump price of N185 across, Mobil, Total, ConOil, NNPC retail outlets, while most independent marketers are selling between N195 and N200.
Reacting to the situation, national president of IPMAN, Elder Chinedu Okoronkwo, said those operators flout the arrangement by contravening and defying the industry-wide agreement are working against the interest of the country and the public.
Okoronkwo in a telephone chat with our Correspondent, said, “I know we had an understanding with the NNPCL after we approached them demanding for direct supply to independent marketers which they obliged, it will not serve the interest of the country for us to disappoint Nigerians. We made the NNPCL to understand that the huge price differential was fueled by arbitrary ex-depot price as well as other associated costs. Now Lagos and Abuja have no reasons to sell above N185 per liter.”
NATIONAL ECONOMY gathered from sources that Independent Marketers receive products from NNPCL in Lagos at N172 per liter and after associated costs to land it at outlets it should be sold at N185 per liter.
In Port Harcourt NNPCL sells to marketers at N188 a liter while outlets are allowed to sell at between N200 and N210 per liter. The same situation should be replicated in the South East and north-east due to logistics challenges.
Okoronkwo confirmed the findings saying it is outrageous to sell above those prices based on current distribution arrangements.
However, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) said, the group has ensured strict compliance to open market operations and have been carrying out surveillance across the country to ensure its members do not engage in hoarding or smuggling of products.
National president of the association, Dr Billy Gillis-Harry, told our correspondent that because of associated costs and different operating environments, prices tend to differ.
“What we have ensured is that our members operate regularly to ensure even distribution of product nationwide. But let me add, we are credit marketers who source funds from financial institutions with huge interests and sourcing and receiving products are not coming immediately. You stay days to take possession and land products at outlets which extends time of loan repay, so marketers would adjust in this case to realise and repay money borrowed.
“Yes the NNPCL is selling to us at newly agreed pump price and directly also, but it doesn’t come immediately because after raising money you wait for allocation and all these adds to cost of fund and operations,” he said.
Gillis-Harry, said the important thing here is that the ssociation is making enormous sacrifices to ensure it supports NNPCL to provide services but the adjusted pump price differences is to make them remain in business.
Automation As Transparency Driver
Meanwhile, major oil marketers have identified inadequate investment in modern technology to drive data collation as a major factor affecting initiatives to promote transparency and accountability in the country’s downstream oil industry.
To facilitate transparency therefore, the Marketers Association of Nigeria, (MOMAN), has called for the automation of the industry. Executive secretary of MOMAN, Mr Clement Isong, while speaking at a virtual workshop on world international data day in Lagos emphasised the importance of data and automation in the downstream business.
He said automation will ensure transparency and boost excellent customer service, eliminate fraud, and corruption and clean up the reputation of the industry.
He urged the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to invest in infrastructure for data gathering, Isong said, “Our position in MOMAN is that we arelooking for the automation of the entire supply chain. It will mean everybody needs to invest in order to optimise their businesses.”
He said the beneficiary eventually will be the customer, adding, “it is good for corporate governance. It removes people’s ability to steal and the authority (NMDPRA) itself has got to invest in infrastructure for data gathering and has got to do a preliminary analysis of that data and has to put up that information on its website which investors, marketers operators, and everybody can access.”
On that basis, he urged the agency to optimise the business and make investment decisions.
“It is fundamental to a deregulated system. It improves the quality of decision-making as well as transparency and eliminates bad behaviour as well as fraud and theft. You have to shine your light and darkness and bad practices will disappear. This is very important.” he added.
Blocking Leakages
In addition to critical industry suggestions, the chief executive officer (CEO) of the Center For The Promotion Of Private Enterprise (CPPE), Dr. Muda Yusuf, has demanded immediate removal of petrol subsidy regime and plugging of all identified revenue leakages in the oil and gas industry.
Yusuf, in a detailed document presenting an economic agenda for the incoming administration said, one of the key considerations to stabilize Nigeria’s macroeconomic system is to undertake a wide-ranging reforms in oil and gas industry, the regulatory environment, and pursue fiscal consolidation.
“The Nigerian economy is in a stumbling and fragile state and in dire need of a new direction. The political transition offers a great opportunity to chart a new course,” Yusuf said in the document.
He added that the administration should establish quality economic governance for signalling and investors’ confidence.
“The new president should also appoint a substantive minister of Petroleum Resources “to promote professionalism and transparency in the sector. The practice of the President assuming the role of Minister of Petroleum should be discontinued,” “To achieve these, the president-elect should set up a Transition Committee on the Economy “to come up with propositions of what needs to be done differently and ensure the delivery quick wins in the first one month of the administration”. added Yusuf.
