Fuel importers wary of subsidy removal

Petroleum products importers are now wary of investing their money on importation to guard against what they described as bad debt that may result from the planned subsidy removal.

Meanwhile, the petrol scarcity in the country has continued to bite harder, with some marketers selling the product for between N120 and N150 depending on the location. Indeed, other marketers have begun to attach unnecessary conditions to purchase of fuel at filling stations, thereby forcing the consumers to spend above their budgets.

The Federal Government had on Monday disclosed plans to remove fuel subsidy next year, which is likely to shoot the pump price from N87 to N97 per litre. It argued that having spent excess of N1 trillion on fuel subsidy in 2015 alone, the 2016 budget deficit would definitely increase, going by the uncontrollably decline in crude oil prices.

A petroleum importer, who preferred anonymity, told The Guardian yesterday that the fuel scarcity would persist till 2016 because many of the importers are now exercising caution due to the planned subsidy removal and its likely effect on their subsidy outstanding.

The source said although the government has recently paid about N522 billion subsidy claims in the supplementary budget, the marketers are still wary of investing money on the third quarter import programmes due to the perceived policy inconsistency of the Federal Government. “We have discharged some products recently, and we are expecting other cargoes soon, but our concern is the government policy, weather it will pay the subsidy on it or not.”

“The exchange rate differential is still a burden on us which has not been cleared by government. Forex availability is another issue, how do we expect the marketers to bear all these, when everybody knows that we operate on loan facilities from banks? ” the source queried.
The Guardian checks revealed that long queues persist at the filling stations while many are still under lock and key.

A station manager at a Mobil filling station in Ifo, Ogun State, who did not want his name mentioned, told The Guardian that the dealer ordered them to sell lubricants as a condition for buying petrol, although it sells at the official pump price.

Motorists urged the Federal Government to urgently address the situation and save the masses from the untold hardship on account of the situation.

However, oil prices edged higher yesterday after a slump to near 11-year lows in the previous session. Brent crude, the global benchmark, gained 79 cents to $38.71 a barrel, raising the hope of stakeholders that the prices might be higher next year.

Chevron Chief Executive Officer, John Watson, said yesterday that oil prices would likely climb next year as supply and demand in the market begin to even.

Watson did not give a specific price projection for crude, but he noted the oil giant has prepared to live with whatever prices the market gives. He cited Chevron’s plan to cut capital spending by 25 per cent in 2016, with further reductions expected in the following years.