Oil marketers are increasingly worried they can’t import petrol due to the dollar shortage in the country. Despite the deregulation of the downstream sector, concerns have been raised about the potential comeback of the country’s persistent fuel scarcity, according to THE PUNCH.
Expectations were high when oil marketers canvassed for the removal of fuel subsidies, and deregulation of the downstream sector. Many were optimistic that the deregulation of the downstream sector would break the monopoly of the Nigerian National Petroleum Company Limited in petrol importation and bring an end to the country’s perennial scarcity of the product.
However, months after President Bola Tinubu pronounced an end to fuel subsidies on May 29, the country has not been able to end NNPCL’s monopoly in petrol importation.
After the first batch of 27 million litres of petrol imported by Emadeb Energy in July, independent oil marketers have not been able to bring in a single drop of petrol. The national oil firm has remained the sole importer of petrol.
The monopoly in the downstream sector has made a mess of the deregulation of the sector, giving NNPCL the power to continue to fix prices and putting the country at risk of fuel scarcity.
The Nigerian Midstream and Downstream Petroleum Regulatory Authority and NNPCL had argued that other marketers were free to import petrol, as those who had applied for importation licenses had been given.
The National Controller Operations of the Independent Petroleum Marketers Association of Nigeria, Mike Osatuyi, told The PUNCH that marketers were not importing petrol because of forex scarcity and the increasing price of crude oil at the international market.
“Marketers are not importing because of the price. But the pro forma invoice still exists, and marketers can still pick it up from the NNPCL since it is still the only one importing,” he said.
Oil price rose to $94.95 per barrel on Thursday and a dollar was exchanged for N770 at the Investors’& Exporters’ forex window and 985/$ at the alternative market.
Emadeb Energy’s Chief Executive, Adebowale Olujimi, during the arrival of the product vessel in June, said petrol importation was not “sustainable”.
“Petrol importation is not a sustainable way for a country to run. From what we saw when PMS price rose to over N600 per litre, it is an indication that the dynamics of the business is a tough one. It requires huge US dollars to bring in this. The way forward is for local refineries to be revived,” he said.
A source in the Major Oil Marketers Association of Nigeria told our correspondent that the market was deregulated so that other independent marketers could also bring in their products. He explained that it was supposed to give rise to healthy competition, which would eventually bring down prices. That dream, he said, was now a “mirage”, as marketers had not been able to access forex.
“NNPCL has reduced importation. And the whole idea was for private individuals to also import petrol to augment what NNPCL brings in. But marketers are not importing. So, NNPCL still remains the only importer,” he added.
The NNPCL’s spokesperson, Garba-Deen Muhammad, told PUNCH correspondent in June that the company would cut down its fuel imports programme in August when the Dangote Refinery commences operations.
Corroborating Muhammed, while speaking to journalists after a meeting with oil marketers in Abuja in June, the Chief Executive of NMDPRA, Farouk Ahmed, said NNPCL had cut down on importation.
Since the end of subsidies, which cost the country about N12tr, prices of petrol have risen from between N180 and N200 per litre to between N614 and N700 per litre. There were fears that the price could go as high as N720 per litre due to the rising exchange rate and the rising price of crude at the international market, but the NNPCL has since allayed the fear.
“Nobody wants to run at a loss. So, we are all watching to see what happens. The foreign exchange is the problem because the naira keeps weakening against the dollar. No bank is willing to even stick out its neck to bankroll a deal. Now, depots are running out of stock, and may soon be forced to fall back to NNPCL for supplies,” another source told The PUNCH on Thursday.
The controversy surrounding products supplies got even messier when the IPMAN Mosinmi Depot recently threatened to institute a legal case against the NNPCL over failure to supply its members with products eight months after payment.
According to IPMAN Mosinmi Depot in a statement, each member had paid N25 million per 45,000 litres of petrol truck, but it had not been supplied.
A source close to the situation, told The PUNCH that the affected marketers were up to four thousand.
The spokesperson of NNPCL, Garba Mohammad, did not respond to inquiries on the allegation.
But a source at the NNPCL, who begged not to be mentioned because he was not authorised to speak on the matter, said that NNPCL should not blamed for issues relating to petrol because it was not the only importer of the product.
“Why is everybody blaming NNPC for fuel scarcity? NNPC is no longer the sole importer because the sector is now deregulated. Other marketers should also go and import because they have been given licenses. Why are they still dependent on NNPCL for products?” the source queried.
The country has witnessed two incidents of fuel scarcity since the government announced the deregulation of the downstream sector and the removal petrol subsidy. READ ALSO:
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The Chairman of Satellite Depot of IPMAN, Akin Akinrinade, blamed one of the incidents on stock shortage.
“Nobody is saying anything to us yet. And as we speak, we are still not loading products here. In fact, the situation is worsening because the queues continue. Even some of NNPCL Retail stations also don’t have products for sale. I believe it is a stock issue, and the NMDPRA should be able to tell us what is really happening. I know they won’t want to say the truth,” he said.
However, the President of the Petroleum and Natural Gas Senior Staff Association of Nigeria, Festus Osifo, debunked the claim that NNPCL was out of stock of petrol.
