ABUJA, JANUARY 5, 2018 – Nigerians may soon have to buy premium motor spirit (PMS), otherwise called petrol, at an official price of N185 per litre.
Indications of this emerged on Thursday when the Federal Government said the current price of N145 per litre was no longer sustainable, considering the landing cost of fuel in the country.
Stakeholders in the oil industry told the Senate at an interactive session hosted by the Senate Committee on Petroleum Resources (Downstream) that landing cost of petrol was now between N170 and N171 while the right price to sell the product may be within the sum of N185 per litre, considering the pricing templates.
But the government assured Nigerians that critical steps would be taken in the next 18 months to address the issue of inadequate supply of fuel through the nation’s refineries which are currently not working at optimal level.
The position of the Federal Government was made public by the Minister of State for Petroleum Resources, Ibe Kachikwu, and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Maikanti Baru, in their presentations before the committee.
The two top officials of the petroleum sector were on December 28, 2017 summoned by the Senate Committee on Petroleum Resources (Downstream) following a directive by Senate President Bukola Saraki that the committee cut short its Christmas and New Year recess and immediately convene a meeting with industry stakeholders.
They were invited to shed light on why the fuel crisis across Nigeria, which had been on for about one month, had been intractable.
The meeting eventually held on Thursday.
While the fuel crisis hit its crescendo, facts emerged that the presidency had been subsidising petrol for N26 per litre without authorisation of the parliament which ought to pass such expenditure as part of the budget.
It was expected that the committee would ask the minister and the NNPC GMD to explain the source of the subsidy being paid, but Senator Kabiru Marafa shocked everyone present at the meeting when he announced, at the commencement of the sitting, that the meeting would only focus on the ongoing fuel crisis “while other issues would be dealt with by other committees at appropriate times”.
True to his words, he overruled efforts by a member of the committee to bring the issue of subsidy payment to the table for discussion.
Speaking on the appropriate pricing for fuel, Kachikwu said, “The landing cost of products today is about N170/171.
“The price at which we sell it is N145. So, there’s a disparity between the N170 and N145.
“What that means is that those individuals who are really there may not feel an obligation like NNPC has to meet national supply.
“So, we need to step back to determine what do we do.”
Asked if the N170/171 was the landing cost or the ex-depot cost, he said the landing cost would be about N160.
When further asked by the lawmakers if N170/171 was what Nigerians were expected to pay at the pumps, Kachikwu said there were other related costs like NPA, NIMASA, storage, lighting and other charges that would determine the final price.
But he insisted that the key component was the international selling price of petroleum products which, he said, Nigeria didn’t have a variable on.
“Our point is whether we established 20 or 25 percent margin, there is a gap and this is where we need your help.
“How do we deal with that? There are three modalities we’re looking at in dealing with that, because my position is that whatever we do, given the logistics constraint of NNPC for a 100 percent supply and overriding burden of the situation, we need to free the marketers to do their business.
“To do that business, we need to address that pricing issue. To address that pricing issue, we’re looking at three models.”
He noted that diversion played a major role in the crisis as prices of fuel in neighbouring countries made the business of fuel smuggling and diversion profitable.
“People take advantage of situations like this and that’s why there was hoarding as well as stealing of products meant for Nigerians,” Kachikwu said.
He added: “There has been a loose enforcement on diversion in the country.
“We have not been able to police our depots adequately. We need to make marketers responsible for every tank of fuel up until the point of delivery.”
He noted that the Petroleum Products Pricing and Regulatory Agency (PPPRA) would play an important role in determining the price based on the templates.
But the chairman of the committee, Senator Kabiru Marafa, said, given the templates presented, fuel price which may rise to N185 per litre would not be acceptable to Nigerians.
The GMD NNPC, Maikanti Baru, blamed the media for playing a role in the fuel crisis as he noted that reports of the fuel crisis gave impetus to the decision of the hoarders to carry on the wicked act.
“News in the media, especially social media, was one of the reasons why some marketers were hoarding the products.
“We tackled that by re-assuring Nigerians that there is enough of the products and there is no issue as far as increase of price is concerned,” he said.
He noted that high cost of fuel in neighbouring countries gave room for greedy fuel marketers to divert fuel for higher prices.
“Our surrounding countries are selling for not less than N300 and above.
“Countries like Cameroon sell for N407. That large price differential, N145 to N400, is a large prospect for smugglers,” he noted.
Speaking on average daily consumption of fuel in the country, Baru said, “Nigerians consume between 27 and 35 million litres of PMS per day.”
On efforts and steps taken so far to curb the fuel crisis, Baru said the NNPC had increased its surveillance in partnership with Department of Petroleum Resources (DPR) and the Nigerian Security and Civil Defence Corps (NSCDC) to ensure that fuel was no longer diverted.
He also disclosed that the NNPC management directed 24 hours operation in all depots to ensure 24 hours loading of products with a mindset to ensure fuel gets to the fuel stations across the country.
He disclosed further that the NNPC, in response to the crisis, brought in six extra cargoes, containing 300 million litres, as additional imports to increase the day’s sufficiency.
“We have re-activated and re-streamed the Kaduna and Port-Harcourt refineries.
“Kaduna has been contributing 3.25 million barrels per day and Port-Harcourt contributes 3 million,” he said in response to a question on the functionality of the refineries in the country.
Meanwhile, a mild drama played out at the committee sitting when three people introduced themselves as presidents of the Independent Petroleum Marketers of Nigeria (IPMAN) and wanted to speak on behalf of the body.
The first to have his name on record was Obasi Lawson while the two others, Sanusi Fari and Okoronko Chinedu, later introduced themselves as presidents of IPMAN.
“I am Okoronko Chinedu, elected IPMAN Chairman, affirmed by the Appeal Court two weeks ago,” Okoronkwo said, much to the surprise of the audience.
But Sanusi Fari stood up to counter him, saying he was the authentic chairman of IPMAN.
The embarrassing situation was brought under control when Chairman of the Senate Committee on Petroleum (Downstream), Kabir Marafa, called on the Secretary of IPMAN to meet with the three, have a common ground and present the position of IPMAN on their behalf.
The Department of Petroleum Resources (DPR), represented by its Director, Modecai Ladan, warned that any petrol station found to have been hoarding fuel would be sanctioned.
“If you are found hoarding, we will discharge your products free of charge, but we have also found out that that is causing a problem.
“Nigerians will just go in, take fuel, go out to empty their cars and come in again.
“If you are caught diverting we will charge you at the rate of N275 per litre and you must pay the government,” he warned.
Meanwhile the National Assembly has requested for the list of filling stations that had been caught hoarding, diverting, or selling above normal price so that they could face stiffer penalty.
Senator Marafa, who issued the order, said the list should be submitted to the parliament by January 16.