The last may not have been heard of how agencies under the Ministry of Petroleum Resources swindle the nation of huge cash flow while taking advantage of government’s reluctance to fully deregulate the downstream sector of the oil and gas industry.
Investigations by BusinessDay show that two agencies involved in fixing and controlling the price of petrol, the Petroleum Equalisation Fund (PEF) and the Petroleum Products Pricing and Regulatory Agency (PPPRA), would be costing the country over N125.26 billion annually, an amount that would have been channelled into providing other developmental projects and bolstering the nation’s dwindling revenue base.
Specifically, the PPPRA’s Administrative cost was formerly 30 kobo, however, it has been increased to N1.23k per litre, according to industry sources. It is estimated that the country consumes 40 million litres of petrol daily, giving a total N17.95 billion annually when N1.23k is multiplied by 40 million litres. Marketers are already complaining about this new development they say is an attempt to raise money for the agency whose impact is barely felt.
The story is not different with PEF at N7.35k as a bridging cost. This gives an estimated N107.31 billion annually when multiplied by an average 40 million litres consumed daily and over a year. Sadly, most of their disbursement is still shrouded in secrecy as payments to marketers cannot be verified. This has also left many petroleum marketers being owed their bridging cost by these agencies of government.
“They would tell you they have many other things they are doing, but that is the reality on ground,” a marketer who spoke with BusinessDay lamented.
According to the investigation, many of the marketers say if the government had fully deregulated the industry such a huge sum that may not be used mostly to the benefit of the industry by the agencies would have been deployed to other development sectors such as schools and health centres.
Instead of the government going to the World Bank and IMF for loans, such money could have been effectively harnessed for the benefit of Nigerians, they say.
Despite these huge sums of money not accounted for the government still makes budgetary allocations for these agencies annually, they note.
“We are not saying that the agencies used all these money for themselves, but, how much of the money do they deploy to develop the sector,” another operator asks.
The sector is replete with dilapidated infrastructure that could have been fixed even by half of the unaccounted amount if these agencies make it available for the operators to upgrade their facilities.
If the downstream sector of the petroleum industry has been fully deregulated the two agencies would have no basis to exist. Their effect is never felt in the industry as all they do is to collect money from Nigerians for their benefits. Their existence is part of the inefficiency in the system, according to an operator.
Phone calls put across to the executive secretary of PPPRA for two days were not responded to neither was the call to the corporate affairs officer, one Mr Apollo. Their phones were either not reachable or switched off.
Although the Ministry of Petroleum tried to explain misconceptions around the issue of Petroleum Products Deregulation.
According to the minister of state for petroleum resources, Timipre Sylva, after a thorough examination of the economics of subsidising PMS – petrol for domestic consumption, the Federal Government concluded that it was unrealistic to continue with the burden of subsidising PMS to the tune of trillions of naira every year. More so, this subsidy benefits large part of the rich rather than the poor and ordinary Nigerians.
Deregulation means that the government will no longer continue to be the main supplier of petroleum products, but will encourage private sector to take over the role of supply.
This means also that market forces will henceforth determine the prices at the pump, he said, stating that in line with global best practices, government will continue to play its traditional role of regulation; to ensure that this strategic commodity is not priced arbitrarily by private sector suppliers.
Despite the statement from the minister, marketers say there is no full guaranty that subsidy would not come back because it is not full deregulation.
