By Prince (Dr) Samuel Ibiyemi (Founding Publisher of Nigerian NewsDirect)

First Published: October 22, 2012

Inflated fuel price by marketers

It is disheartening that officials of the Nigeria Labour Congress (NLC) have refused to stop sales of Premium Motor Spirit (PMS) above the official price of N97/litre even though they embarked on nationwide strike which paralysed economic activities when President Goodluck Jonathan announced the removal of subsidy on January 2, 2012.

Equally, the Save Nigeria Group led by Pastor Tunde Bakare of Latter Rain Assembly till date has yet to criticise major and independent marketers or engage the Police to stop sales of PMS above the official pump price at filling stations located outside Lagos, Abuja and Port Harcourt. Both organisations are quite aware that these markets have been collecting fuel subsidy from the government and yet sell PMS above the official pump price. Can we call this unnecessary quiet position of these two groups as deliberate protection or support of their members to cheat both the government and motorists?

The exploitation through inflated price is responsible for excess supply of PMS diverted from Lagos by markets to states such as Ogun, Oyo and Edo among others, in order to take advantage of the opportunity to sell PMS above the official price without any form of resistance by the general public and caution by the Department of Petroleum Resources (DPR). It is with ease that Nigerians drive into filling stations of Major and Independent marketers in these states to buy PMS at N110 or even higher, with the exception of stations of Nigerian National Petroleum Corporation (NNPC) who still sell at N97 per litre. The ease of purchase implies that there is no need to make trouble because it takes almost an hour for a motorist to buy PMS at N97 per litre in any filling station in Lagos, Port Harcourt and Abuja, compared to the ease in buying at N110 per litre in other states. Is this the type of deregulation that the Nigerian Labour Congress (NLC) and Save Nigeria Group are willing to promote instead of allowing the government to introduce guided-deregulation and cancellation of fuel subsidy needed for developmental projects. This is indeed a challenge for security agencies and the DPR. Officials of the NLC who will fight the government to a stand still in order to frustrate introduction of deregulation and yet do nothing to stop marketers from selling at N110 or N120 per litre while still collecting subsidy.

In the last edition of Mr Critical, it was stated that the current fuel supply and distribution crisis that Nigerians are experiencing could be traced to recent vandalisation of products pipeline of the Pipeline and Product Marketing Company (PPMC) at Awepo in Ogun State. At some of the vandalised pipelines, FPMC Engineers who went for repairs were shot and three of them were confirmed dead. As a result of security challenges, PPMC is yet to gain access to the vandled points to effect repairs. The said post along the Atlas-line that feeds five (5) depots and accounts for products supply to the whole of the Southwest region and also contributes to about 60 percent of total bridging to the North. The failure of PPMC to carry out the repair has resulted in hoarding of PMS) by dealers who are union leaders, thereby bringing back long queues  in South Western States. Before this ugly incident, Nigerians had forgotten about the menace of fuel scarcity nationwide even during the protest that greeted subsidy removal in January this year.

Hence, one of the benefits of the aumert fuel supply hiccup in the country for petroleum marketers is the sales of PMS at prices that range between N110 and above per litre by both Major and Independent marketers. The inability of the DPR to effectively police distribution schedules in the downstream sector is also responsible for the inflated price.

Ownership of filling stations

Investigations conducted recently and presented by the Executive Secretary of the Major Oil Marketers Association of Nigeria (MOMAN) Mr Obafemi Olaware during the probe of downstream activities by the Senate Committee on Downstream sector chaired by Senator Magnus Abe shows that labour union officials are receiving 70 per cent of PMS being allocated at each fuel depot whether privately owned depot or not It is clear from this data that labour union officials are not challenging the DPR and they are also not insisting on N97 per litre at stabons, because these stations are making money for them. Is this patriotism? how else will the union officials expect the government to do better when those that are expected to check the government are involved in round tripping of PMS distribution in the country? When workers of the PPMC threatened to embark on industrial action recently over the killings of their colleagues by vandals, what was the response of NLC officials? This is because when there is hiccup in distribution of PMS or kerosene, it creates an opportunity for their stations to earn cut-throat profit.

Finance Ministry

It is indeed hypocrisy also for the Finance Minister, Dr Ngozi Okonjo-Iweala to remain silent on the true position of available fund for the funding of fuel importation. Based on the N800billion earmarked in the 2012 budget and over N400bn already expended on payment of subsidy to marketers during the year it is clear that the amount left cannot be enough to finance subsidy payment for the remaining quarter of this year. From available records obtained from the PPPRA only 20 companies performed in the fuel importation allocation issued for the third quarter. Out of this number, only five of them imported more than 10 percent of the figure allocated to their companies. The inability of 39 companies appointed by the PPPRA to import fuel was based on the refusal of banks to finance them since they are aware that these importers may not refund loans until sometimes in June 2013 based on the current payment arrangement by the Finance Ministry.

Impact of subsidy probes

The series of probes by the House of Representatives, Senate and Aigboje Ag-Imolhuede committee resulted in long queues in city centres where only NNPC filling stations and few stations that can be controlled by the DPR are selling PMS at N97 per litre. Based on limited resources at the disposal of the federal government, long queues for fuel will persist because marketers are not importing fuel to avoid harassment by various probe committees.

According to the CEO of a prominent downstream firm, “Importation of PMS is a no go area for my company now in order to avoid further embarrassment by the National Assembly and the Finance Ministry, we have been spending so much time and resources on engagement of legal practitioners to clear the company’s name from the mess of fuel subsidy scandal.”

The CEO added that banks are also not willing to finance fuel importation due to the fact that importers will definitely default based on the current payment arrangement by the Ministry of Finance.

From all indications, the activities of the Finance Minister this year should be blamed for the long queues at filling stations. The new administration of PPPRA has done everything possible to address transparency issues through various checks put in place and reduction in the number of fuel importers.

The 42 oil marketers granted import permits in the first quarter of the year were mandated to import a total of 3.755 million tonnes of petrol, which is equivalent to 5.036 billion litres of petroleum products In the second quarter PPPRA Executive Secretary Mr Reginald Stanley reduced the volume to 3.575 million tonnes, equivalent of 4.794 billion litres, reflecting a drop of 180,000 metric tonnes or 241.38 million litres, Also, in the third quarter, 39 oil marketers were issued permits by the agency to import 3.125 million metric tonnes of fuel, an equivalent of 4.20 billion litres.

Hence stringent conditions being put in place by the Minister of Finance should be reviewed to enable marketers receive reimbursement early for volume of product imported and then make it possible for banks preferring short term lending to embrace fuel importation under the Petroleum Support Fund (PSF) Scheme.

Adoption of guided deregulation

As the fuel scarcity bites harder, aides of President Goodluck Jonathan should use this opportunity to enlighten Nigerians that labour unions mobilising various civil societies against fuel subsidy removal are greedy and self-centred. Nigerians were entertained and provided with food and drinks during the subsidy protest of Occupy Nigeria’ by Save Nigeria Group in collaboration with the NLC. Why is the labour not organising the same protest against filling stations owned by their members selling PMS at over N110 per litre? Why have they not sponsored miscreants to bum tyres and ask Nigerians to embark on strike to stop dealers from selling PMS at N100 per litre since they are still collecting subsidy and bridging claims?

Deregulation is the best option for now if the problem of downstream must become a thing of the past. The SURE Committee of Dr. Christopher Kolade should commence work and utilise proceeds from subsidy removal for funding of infrastructure like the success recorded by the Petroleum Trust Fund (PTF) put in place by late General Sanni Abacha. An economy in the hands of volatile workers unions will crumble, welfare of workers, situation whereby leadership of these workers unions become an instrument of destruction for opposition parties should be avoided. Guided deregulation with a measure of control by the PPPRA after the enactment of the Petroleum Industry Bill (PIB) by the National Assembly should be the most interesting issue for political and sincere labour leaders. Guided deregulation will allow revenue being wasted on few subsidy thieves to be utilised for development projects and genuine marketers will invest in refinery and fuel importation.