Fuel scarcity/IMF’s subsidy removal proposal: Dealers shut filling stations

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…As FG, NLC, Marketers disagree

…PPPRA assures of adequate supply

…Blackmarket price hits N220 per litre

By Kayode Tokede and Ikenna Omeje

Most filling stations in Ogun and Lagos states were shut at the weekend on the basis of no fuel in the underground storage by dealers. This follows a disagreement between the Federal Government, Nigeria Labour Congress versus Petroleum Marketers over the proposal by the International Monetary Fund (IMF) that the Federal Government should remove fuel subsidy.

Following this development, queues of motorists for fuel extend beyond each filling station since only few of them were opened to sell  from two or three dispensing pumps for average of one hour per day with no threat of monitoring officials from the Department of Petroleum Resources (DPR).

For instance, on Ijoko road in Sango-Ota of Ogun State, only three filling stations opened to sell fuel on Sunday for short period with long queues. This includes Mobil Oil, NNPC and NIPCO filling station at Ntabo Bus stop. On Lagos-Abeokuta Expressway, only NNPC filling station at Dalemo was opened to motorists. In Abeokuta, where the Zonal Coordinator of the Department of Petroleum Resources (DPR) is located, most filling stations were shut while filling stations in the rural areas took advantage to sell a litre of Premium Motor Spirit (PMS) between N220 and N250 per litre.

Petrol attendants made brisk business by charging N200 per vehicle at few filling stations of the Major Marketers that opened for business.

However, Executive Secretary Petroleum Product Pricing Regulatory Authority (PPPRA) gave assurance of adequate supply in a statement issued on Sunday. He disclosed that as a data bank has been created to monitor the supply and distribution of petroleum products. According to him, the daily average supply of PMS for the year 2017, 2018 and 2019 are about 46 million,54 million and 56 million litres respectively. “Based on the available data, there is adequate supply of PMS with over 21 days sufficiency. The agency wishes to assure Nigerians to disregard the panic buying,” he said.

The Managing Director (IMF), Christine Lagarde while speaking at the just concluded joint  spring meeting with the World Bank in United States of America (USA) said it is the right thing to do as $5.2 trillion has been spent in subsiding fuel since 2015.

Speaking with Nigerian NewsDirect during the weekend, the Executive Director, Masters Energy, Mr. Felix Eribo, said that the advice given to Nigeria by IMF is a good one, stating that the removal of fuel subsidy is long overdue.

According to him, “Subsidy is long overdue. We all know that. Presently, it’s only the Federal Government that imports PMS, because they have virtually driven every other operator out of business.

“No other oil marketer imports PMS. It is only PPMC and NNPC that import PMS, because they enjoy the subsidy. Every other operator in the industry is lying fallow. But if it is fully deregulated and the subsidy is removed, the market will flourish. People will sell as they import.

“The apprehension in the industry that price will go up, no! It will not. You can go to Oando, they will sell at N140; go to Mobil, they will sell   N145, go to Conoil, they will sell N143. You will go to the best. We can go back to the era when people lobby customers to come to their stations,” he said.

He insisted that the best time to remove subsidy is now. On the argument by some people that removing subsidy will wreak havoc on the economy of the country, he noted that Africa has spent $5.2 trillion on fuel subsidy and 60 to 70 per cent of the money must have been spent by Nigeria; that this money could have been used for infrastructure development.

He said, “Those are the things they have been selling to us all these years; part of the ploy that the Federal Government has been using.  Did you see the papers three days ago? That Africa has spent $5.2 trillion dollars on fuel subsidy and 70 to 60 per cent of that money is in Nigeria.”

Eribo bemoaned the amount being spent by the government on fuel subsidy saying that most of the marketers who have tank farms, have reduced their workforce by 60 to 70 per cent.  And the reason is that they do not trade on PMS and DPK again, but only trade on AGO, which are imported by PPMC and NNPC or buy from the creek.

He said that to end the problem of fuel subsidy, the government should not only remove subsidy, but deregulate totally and provide other incentives that will make it easy for marketers to compete.

He stated that the issue of multiple charges imposed by the government and its agencies on marketers who import fuel and the challenges of accessing foreign exchange when tackled, will make the removal of subsidy successful.

He said that a situation whereby an importer spends up to N2 billion to import fuel and at the end the person cannot make up to N10 million profit, is not business.

Between January and November 2018, the Nigerian National Petroleum Corporation spent a total of N623.16billion on fuel subsidy under its under-recovery arrangement.

The Nigerian Labour Congress (NLC) had faulted IMF’s call for federal government to remove fuel subsidy, but the federal government said the advice is a welcome development.

However, the Managing Director/ Chief Executive Officer of Zech Oil and Gas Nigeria, Mr. Uche Okenyi, on his own part, said that the advice by IMF is a wrong one. According to him, fuel is being subsidized to balance the deficit in the economic indices of the country. He accused IMF of not being realistic, asking if they will assist the country with soft loans that can be used to cushion the effects of total removal of fuel subsidy.

He said that if the government must remove fuel subsidy, it must be a gradual process, “There should be some engineering, there should be a process of doing that; working from point A to point B. That’s the way I look at it. And besides, we need to also be convinced that the government is willing to do that,” he said.

He advised the government to put facilities in place before the removal of subsidy, so that the people will not be subjected to avoidable suffering.

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