Fuel scarcity: Depot Operators raise concerns over costs, as FG insists on regulated price
No agreement in sight between the Federal Government and marketers over how much Premium Motor Spirit (PMS) also called petrol should sell.
While the government insists on official N165 per litre as stipulated in the petroleum product pricing template, Depot operators say escalating cost of purchase is not guaranteeing the products should be retained at present price regime.
The Government also advised Nigerians against panic buying of PMS, also known as petrol, disclosing that the country currently had over two billion litres of PMS in various depots.
Both the Nigerian Midstream and Downstream Petroleum Regulatory Authority, the Nigerian National Petroleum Company Ltd. and the Pipelines and Product Marketing Company insisted that current pump price must not be altered after their visit to jetties in Apapa, Lagos on Tuesday.
The depots visited by the top officials of the agencies were NIPCO Depot and TotalEnergies Depot.
Mr Ugbugo Ukoha, Executive Director, Distribution Systems, Storage and Retail Infrastructure, NMDPRA, maintained that petrol was a regulated product and urged marketers to comply with the pricing template.
Ukoha said the conflict between Russia and Ukraine had led to an increment in the cost of Automotive Gas Oil (diesel) which was a critical product used in transporting of petroleum products from the depots to the retail outlets.
He said, “So, when we observed that this poses a big challenge in the movement of other products, we made the representation to the Minister of State for Petroleum And Mr President graciously approved that the freight rate for trucks be increased.
“There’s a N10 addition which we will apply to the different routes to enable trucks to move to docks easily with less burden.
“With these kinds of efforts from the government, we can only continue to appeal to operators within this industry to play by the rules.
“PMS is a regulated product and the prices are fixed. The ex-depot price is known. The pump price remains N165 and the authority is ever ready to enforce those rules.So, we will continue to urge Nigerians to keep within these operating rules.”
Ukoha said the focus of the stakeholders in the next few days would be to close the supply gaps and resolve the ongoing scarcity of petrol as soon as possible.
Also, Mr Adetunji Adeyemi, Group Executive Director, Downstream, NNPC Ltd. said the purpose of the visit to the depots was to get first hand information on the challenges responsible for the current scarcity.
Adeyemi said despite the challenges globally in terms of the supply chain, NNPC had continued to provide petroleum products, specifically PMS to Nigerians.
“Today we have about two billion litres of PMS in-country which is about 34 days sufficiency. So, there is sufficient petrol in the country.
“We are working with the entire stakeholders and players in the downstream sector to ensure that this product gets to the distribution channels and also the stations.
“We want Nigerians to continue to enjoy free flow of petroleum products,” he said.
Mr Isiyaku Abdullahi, Managing Director, PPMC, said the company had been supporting transporters and marketers with diesel in form of palliative to ensure the smooth distribution of PMS and ameliorate the suffering of Nigerians.
Abdullahi said three vessels carrying about 60 metric tons of PMS were currently discharging at the Apapa jetty which would be further transported to Lagos and other parts of the country to restore normalcy to the situation.
On their parts, Mr Suresh Kumar, Managing Director, NIPCO and Mr Ernest Umunna, Site Manager, TotalEnergies, assured Nigerians of product availability in their depots.
They also promised to carry out 24-hour trucking out operations to ensure that the scarcity situation in Lagos was resolved within the next few days.
Meanwhile, member companies of the Depot and Petroleum Products Marketers’ Association of Nigeria (DAPPMAN), have complained that cost of petroleum products purchase and handling has escalated and eroded their profit margin.
Though the Association empathised with the public, it however blamed the suspension of the Petroleum Industry Act, PIA, implementation for creating hiccups in the system.
In a statement released late yesterday in Lagos by Olufemi Adebayo Adewole, Executive Secretary, DAPPMAN, the Association regretted the current setback in the distribution and supply of premium motor spirit (petrol) at the various stations dispensing at N165 per litre.
According to Adewole, Nigerians would please note that the on-going Russia-Ukraine War has adversely affected the world, including our dear country Nigeria. Its adverse impact on the international prices of fuel and food supply, have resulted in a corresponding increase in local prices of goods and services.
The above situation, DAPPMAN noted, has had its adverse effects on the operating cost of managing the various petroleum products depots in Nigeria.
“You would note that the petrol we supply is sourced, solely from NNPC Limited’s marketing subsidiary, Petroleum Products Marketing Company Limited (PPMC) for our onward sale to the public at the regulated price of N165 per litre.
“This purchase from the PPMC is achieved through funds sourced with high bank interest charges, alongside increased costs of hiring vessels utilised in the delivery of fuel cargoes to our depots.
“This is coupled with the intense scarcity of bunker fuel for running these vessels with increase in the cost of diesel used in powering equipment and machineries in our depots and retail outlets.” DAPPMAN added the statement.
Offering further explanation, Adewole, said that overtime, depot Owners and the Government have struggled to sustain supply of petrol at the current pump price of N165 per litre despite the huge subsidy cost to Government and abysmal or no profit margins to the Depot Owners.
However he said, “But for its suspension, the implementation of the Petroleum Industry Act 2021 would have provided an ideal enabling environment by creating the free market in which demand and supply would affect fuel pump price.”
The Association however assured the public that Depot Owners, working tenaciously in concert with NNPC Limited, through its marketing subsidiary, will continue to ensure availability of products nationwide.
