Petrol nears N200/litre as ex-depot price, debts, logistics escalate scarcity
• Fuel queues will disappear in 48 hours, MOMAN says
• IPMAN blames private depots for shortages, NMDPRA assures of robust supply
• U.S. to worsen petrol scarcity with proposed export ban
Three months after regulators quietly approved an increment in fuel prices, following claims by marketers that they can no longer sustain operations and sell at the regulated price of N165 per litre, another episode of arm-twisting has begun and may see Nigerians paying between N178 to N200 per litre for petrol.
While fuel queues witnessed in the North-Central region and the Federal Capital Territory (FCT) were attributed to poor road access as a result of a flood, the queues witnessed in Lagos State since Monday was attributed to an alleged increase in ex-depot price, debt and logistics challenges.
If the actions taken three months ago when a similar challenge emerged were anything to go by, Nigerians should brace for another increment in the price of fuel if they would get a steady supply of the product.
Already, many filling stations in Lagos are not selling even though they have products. While major marketers continue to retain the N170 a litre price, many independent marketers are leveraging the situation to sell above the displayed price.
The Chairman, of the Independent Petroleum Marketers Association of Nigeria (IPMAN) Western zone, Dele Tajudeen, said there has been an increase in depot price from N148.7 per litre to N178. Some stakeholders told The Guardian that the Nigerian National Petroleum Company Limited (NNPCL) is starving government-owned depots as well as some marketers from loading while diverting products to some private depots.
The stakeholders also told The Guardian that the state oil company is heavily indebted to some operators even as logistics challenges are compounding the situation.
Tajudeen stated that none of the NNPC depots has products and the private depots took advantage of the situation to hike the price.
“The only option for our members is to opt for private depots to keep business moving. We are totally against the increase because it will affect our profit margins and the masses. Some private depots that have products deliberately refuse to sell for reasons best known to them,” he said.
The IPMAN chairman said marketers should not be blamed for the hike in pump price, adding, “selling at N170 per litre is not realistic.
“Therefore, our members have no other option than to sell between N195 and N200 per litre within Lagos, Ogun and Oyo state, while we will sell between N200 and N210 in Kwara, Ondo, Osun and Ekiti states. Most of the tank farm owners have justified this increase because of different charges, among which are vessel charges paid in dollars.
“We are equally calling on NNPC management and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to investigate the arbitrary increase in fuel price by the private depot owners.”
IPMAN’s secretary of the Suleja-Abuja branch, Mohammed Shauibu, expressed optimism that the queues would end as soon as government, depot owners, NMDPRA and NNPC find a middle ground.
Also, NMDPRA has assured us that the queues will end very soon. The Authority Chief Executive (ACE), Farouk Ahmed, who stated this, explained that all the stakeholders are meeting to find a lasting solution to all the issues that have been raised.
The Authority chief dispelled rumour of stock out, saying: “There is no truth to that at all. Although there may be some issues, the unavailability of PMS is certainly not one of them. There is enough that can last more than 20 days. We have agreed that the loading of PMS should start immediately and I can confirm that this has started. The queues will disappear in a matter of days.”
NMDPRA also said steps are being taken to tackle the perennial queues that started in Abuja two weeks ago. The Executive Director, Distribution Systems, Storage and Retailing Infrastructure, NMDPRA, Ogbugo Ukoha, explained that while the flood in Lokoja is responsible for the queues, NNPC is now moving vessels into the Calabar area.
NNPC had blamed flooding in the Lokoja area for the scarcity of products that have persisted in FCT and other parts of the Northern region, while The Guardian’s visit to Lokoja to assess the situation showed that the road has since been cleared. With the situation now extending across the country, spokesperson, Garba Deen Muhammad, did not immediately respond to phone calls, yesterday.
The Major Oil Marketers Association of Nigeria told The Guardian that the association has products. Executive Secretary of the association, Clement Isong, said the queues would clear in about 48 hours going by truck out by the association.
The Nigerian Association of Road Transport Owners (NARTO) also noted that flooding is still affecting the haulage of PMS in parts of the country. NARTO National President, Yusuf Lawal Othman, said the state of the road around Auchi-Okpella also worsened the development as communities around the area had blocked the road for over two weeks due to the bad state of the highway.
THERE are indications, however, that Nigeria’s plight may worsen in the long run as a proposed U.S. refined product export ban is projected to pose significant challenges and costs to global refining systems.
Analysis from Wood Mackenzie emailed to The Guardian showed that a proposed U.S. oil product ban could save U.S. consumers $5 billion in gasoline prices and increase $2 billion in distillate costs to European trading partners while erasing $30 billion in earnings from US refiners.
VP Refining, Chemicals & Oil at Wood Mackenzie, Alan Gelder, said: “Our models show that the potential ban would save U.S. consumers on gasoline, but any potential savings would be based on new global trade routes being established efficiently, which is not a guarantee.
“Prices could go higher if there are disruptions in this process, eroding US consumer savings. In the long-term, U.S. refineries could see lower future investments, which threatens future U.S. supply.”
Wood Mackenzie estimates that a U.S. refined product export ban would create a 1.4 million barrels per day (b/d) distillate gasoline supply gap globally and would decrease U.S. crude runs by 1.5 million b/d, primarily affecting Gulf Coast refiners. Fill this supply gap would require record export levels from China, Russia and the Middle East.
Research Analyst, North America Refining Assets, Raul Calzada, said: “There is enough global capacity to cover U.S. exports to Europe and Latin America, but it would require extraordinary circumstances, record exports and elevated refinery utilisation levels from China, Russia and the Middle East.”