Access to forex major challenge to marketers — DAPPMAN
The Depots, and Petroleum Products Marketers Association of Nigeria (DAPPMAN), says accessing foreign exchange at official rate was a serious challenge to marketers.
DAPPMAN’s Chairman, Mrs Winifred Akpani said this at a news conference in Lagos on Tuesday.
Akpani called on the Federal Government to give petroleum marketers access to foreign exchange at the Central Bank of Nigeria (CBN) official rate to enhance the supply and distribution of Premium Motor Spirit (PMS), also known as petrol, across the nation.
She said accessing foreign exchange at official rate would boost fuel supply across the country.
She added that the burden of sourcing forex through the parallel market for transactions domiciled in Nigeria had left petroleum marketers in dire straits.
“Accessing dollars for our operations has been an insurmountable hurdle for petroleum marketers.
“The difference between CBN exchange rate and the parallel market exchange rate continues to get wider by the day,” she said.
Akpani noted that in addition to core operational expenses denominated in dollars, petroleum marketers also contended with sourcing funds from the parallel market to pay for fees and levies, some unauthorised, also charged in dollars.
“For example, to charter a vessel to convey 20,000 MT of petrol within Nigeria for 10 days, freight charges are denominated in dollars, that comes to about N220 million at official forex rate of N440.
“And a whooping N440 million for petroleum marketers who have to source forex from the parallel market at N880.
“This implies an additional cost of N11 per litre for this transaction due to the forex official and parallel market differential,” she said.
According to her, for the same transaction, Jetty fees, also charged in dollars amounts to N15.4 million at official forex rates and N30.8 million for petroleum marketers who source from the parallel market.
“DAPPMAN hereby calls on the government to establish a level playing field in the sector by giving petroleum marketers access to forex at the CBN exchange rate for their operations,” she said.
Akpani said accessing forex through the CBN window would enhance capacity and facilitate seamless supply of petrol and birth a regime of sustainability in terms of storage, distribution, and supply across the nation.
“The Nigerian National Petroleum Company (NNPC) Ltd., which historically served as the supplier of last resort, is now the major oil downstream company in Nigeria with the acquisition of OVH and has full access to dollars at CBN’s official rates.
“The NNPC also has access to products through swap arrangements,” she said.
Akpani decried the absence of a level-playing field that guarantees access to dollars for all marketers at official rates, and that having the NNPC as the sole importer of petrol was not sustainable, considering the huge consumption of the product.
According to her, strategic decisions must be made in the industry to ensure Nigeria takes full advantage of expected growth in oil products demand across Africa.
“For us in Nigeria, this will include full deregulation of the sector and a deliberate strategy geared towards creating an enabling environment for all petroleum marketers to add value, alongside the NNPC,” she stated.
Akpani said DAPPMAN considered the government’s plan to remove subsidy in 2023 as the right decision that would reposition the sector for sustainable growth and development.
She said the removal of subsidy would free up funds to shore up the capacity needed to transform the health, education, defence, and transportation sectors among others.
“As we approach the Yuletide and transition to the election year in 2023, the nation needs the full involvement of all operators to shore up capacity and ensure product availability at excellent service levels.
“While there might be fears regarding possible scarcity of petrol, DAPPMAN assures Nigerians of its ability and willingness to work assiduously to ramp up supply as the government addresses the challenges of forex availability in the sector,” she said.
The DAPPMAN boss lauded the Federal Government and the Nigerian Midstream and Downstream Regulatory Authority for emerging gains in the sector, especially, following the introduction of the Petroleum Industry Act.
“There have been important meetings aimed at shaping a sustainable future for the sector.
“These must continue as the success of the sector in the face of the intervening global energy crisis depends on collaboration and consideration of how operators can shore up capacity on the wings of market-friendly policies and a level-playing field,” Akpani noted.
