• Tuesday, June 25, 2024
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As motorists groan, PPPRA makes N30.5bn from petrol it does not sell


The Petroleum Products Pricing Regulatory Agency, PPPRA will earn a staggering thirty billion Naira annually from the administrative fee it levies on every litre of petrol and diesel sold in Nigeria while marketers who sell the petrol are struggling with their own margin.

Until now, the PPPRA charged thirty kobo per litre of petrol sold and ten kobo for diesel but weeks ago, the regulatory agency quietly raised the levy on petrol and diesel to N1.23 per litre, representing a 310% hike for petrol and 1130% increase for diesel.

The volumes reported daily for products are 56m for petrol, 14m for diesel and 3m for kerosine daily. At N1.23 levy per litre, PPPRA will make 23.2bn from petrol yearly, N5bn from diesel and almost N2bn from kerosine sold.

The Depot & Petroleum Products Marketers Association, DAPPMAN is protesting the outrageous fee charged by the regulator and is now asking the government to ensure “an urgent and immediate reversal of this increase.”

The depot owners and markers said in their August 14 letter to the minister of state for petroleum Timipre Silva that they continue incur regular losses in their operations with the PPPRA paying deaf ears to their demand for a more realistic margin.

According to them, “marketers who are expected to pay these charges should at least, be allowed to make some profit rather than consistently suffering financially which is their current experience.”

Businessday learnt that in addition to the N30.5bn collected annually by PPPRA, the Petroleum Equalization Fund, PEF will make another N40bn each year from admin fee it charges on every litre of petrol Nigerians buy.

An important meeting of the board of PPPRA has been called for Wednesday August 23 and it is expected to be stormy.

PPPRA will struggle to manage the grievances of DAPPMAN as well as that of major oil marketers group, MOMAN that have seen the value of their business fall over the last ten years as a result of over regulation by government.

There is also the matter of PPMC which is now struggling to import products as a result of the strict enforcement of the OPEC quota on Nigeria as well as the insistence of state governors that NNPC must fully account for every barrel of crude oil it gets.

“We are beginning to see tightness in supply and Nigeria could be on the brink of petroleum products shortage,” one well informed official told BusinessDay.

Many may not know it, but petrol subsidy has effectively come back even if it is by the back door. And this is despite pledges by government not to incur any more subsidy on petrol.

At the dollar exchange rate of N385, petrol should be selling at N155 but it sells at N145, meaning an effective daily subsidy of N560m calculated by an assumed under recovery of N10 for each of the 56m litres of petrol sold in Nigeria every day.

At the dollar rate of N470 the subsidy is higher at N1.624bn daily. This is derived from the assumed market price of N174 a litre and a N29 per litre subsidy if importers were to secure their FX on the parallel market.

given that while independent marketers sell petrol for N155 a litre, NNPC stations sell the same product for N145. At N470 to the dollar, petrol should be selling at N170 a litre without subsidy, the official said.