Petrol marketers decry supply monopoly as subsidy creeps in

Petrol marketers have disapproved of the monopoly in the supply of the product into the country, even as they confirmed that subsidy has crept in following the government’s intervention.

They said the Nigerian National Petroleum Company Limited (NNPC) Limited should not be the sole importer of petrol into the country, considering the provisions of the Petroleum Industry Act (PIA).

“First of all, we need to get out of the bottleneck we have created for ourselves, in which the NNPC is the sole importer of fuel into Nigeria,” said Tunji Oyebanji, MD/CEO of 11 Plc, said on Thursday at the annual conference of the Association of Energy Correspondents of Nigeria in Lagos.

Oyebanji, a former chairman of the Major Oil Marketers Association of Nigeria (MOMAN), said the NNPC’s monopoly has to be broken. “The monopoly of a single supplier in the country needs to be dismantled because it’s inefficient and not sustainable.”

On May 29, President Bola Tinubu announced the removal of the petrol subsidy – a development that led to an increase in the pump price of the product from N186 per litre to over N500. The price was further raised in July to as high as N617.

The subsidy removal coupled with a foreign exchange reform that led to a sharp devaluation of the naira in mid-June was expected to encourage private marketers to join the NNPC in petrol importation. One or two operators brought in the product but the government’s announcement that pump prices would not increase further amid rising global oil prices and naira devaluation put a damper on marketers’ efforts to import the product.

“We have to find ways of bringing other players into the importation business so that there’s competition and efficiency. Then we need to look at the whole logistics chain,” Oyebanji said.

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“Today, there may be three or four facilities that can take vessels of the size of 120,000 metric tonnes. If we have more of those kinds of facilities, we will bring larger vessels into the country,” he added.

He said the regulators should be careful not to take actions that go against the PIA.

According to him, the PIA has established that petroleum prices have to be fixed or determined by market forces. “That is the law, and it is very clear.”

Since the last increase in the pump price of petrol in July, the product has been held constant. This is despite the rise in global oil prices which has pushed the pump price of diesel to over N1,000 from around N640-N700 in July.

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In August, Tinubu assured Nigerians that there would be no increase in the pump price of petrol anywhere in the country.

“Is there still subsidy? I will say yes, in some areas,” Clement Isong, executive secretary of MOMAN, said during a panel session at the event. “The subsidy, as it was, must never come back.”

He said while the government can intervene, the intervention should be clear and time-bound.

He said the higher prices should force the consumers to be more efficient and the operators to look for innovative ways of pushing down their costs to be competitive in the market.

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““If the pump price of petrol had stayed at N185 per litre today with the current global oil prices, Nigeria would have collapsed,” Isong said. “So the subsidy is much less than it used to be, but for us to get to where we want to be, we must make some adjustments.”

He said the adjustments would be in the area of infrastructural and operational investments. “This will have an impact on working capital and cost of funds and we still have local investments to make respect to public health awareness and safety.”