‘Petrol should sell above N170’ — what marketers did not want to say

Anyone who read between the lines would have noticed a foreboding message in the press statement issued by the Depot and Petroleum Products Marketers Association (DAPPMA) on Sunday: these petrol shortages could only get worse.

Except, of course, the government increases fuel price or returns to the much-discredited subsidy regime for marketers.

The barely disguised message from DAPPMA is contrary to the assurances given by the government and the Nigerian National Petroleum Corporation (NNPC) that the crisis would soon be over after disrupting Christmas celebrations across the country.

DAPMMA indeed said many disturbing things in the three-page statement signed by Olufemi Adewole, the executive secretary.

One, its members have stopped importing petrol because of the N145 price, which does not cover their cost since there is no subsidy to make up for the difference.

Two, its members do not have petrol at their depots, contrary to accusations that they are hoarding it.

Three, they have paid NNPC to supply them with the product but the corporation has not been able to do so.

Four, NNPC cannot do so because its own “contractors” can no longer import owing to the rising cost.

In other words, something has to give: either the price is moved up to at least N170, which it calls “current import price of petrol”, or subsidy payment returns.

DAPPMA used to account for 65% of petrol import before the economics turned against them. NNPC — which used to import only 20% (the rest 15% by Oil Marketers Association of Nigeria, MOMAN) — now imports 100%.

“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 percent of the functional receptive facilities and retail outlets in Nigeria,” DAPPMA said.

THE COLD TRUTH

The marketers fell short of making demands, perhaps because their intention was to wash their hands of the accusations that they are behind the crisis.

But read their message carefully again:

“We all know that we presently run a fixed price regime of N145 per litre for PMS or petrol without any recourse to subsidy claims however we also have no control on the international price of crude oil.

“Current import price of petrol is about N170/ltr, NNPC, which absorbs attendant subsidy on behalf of the Federal Government, is the importer of last resort.

“We understand that NNPC meets this demand largely through its DSDP (direct sale direct purchase) framework;  however  due to  price challenges on the DSDP platform, some participants in the scheme failed to meet their supply quota of refined petroleum product, especially PMS, to NNPC. This is the main reason for this scarcity.

“The International price of PMS went up during the hurricane Katrina (that should be Hurricane Irma or Harvey, though — Katrina was in 2005) and has not dropped below USD$600/MT.

“Exchange rate of USD to the Naira is N306 for PMS imports and also interest rate our banks charge is above 25%.

“Landing cost of PMS in Nigeria… means any of our members that imports would have to resort to subsidy claims, a policy already jettisoned by the Federal Government.”

For the record, crude oil was $45 and official exchange rate N197 when a new petrol price of N145 per litre was fixed in May 2016. Now, crude is $59 and CBN rate is N306/$1.

In simplified English, brace for harder times, fellow Nigerians!