The oil marketers who promptly hiked petrol prices as soon as President Bola Tinubu said ‘subsidy is gone’ on May 29, are not responding well to NNPCL’s decision to raise prices on the products they had ordered from the corporation nearly eight months ago, raising an air of uncertainty in the market.
President Bola Tinubu has directed to import petrol henceforth with cash and the same applies to other marketers effectively ending its dominance as the sole importer. This transition period is raising confusion in the market as marketer’s inventory run out without a line of sight to new stock.
The reality that they would now have to source their dollars, import their own crude and truck it across Nigeria is leaving some jittery. The Federal Government would also no longer pick up the tab for inefficient operations.
It gets worse, some vessel owners who had been contracted by some marketers to transship crude already imported by the NNPCL have to live with the reality they could bear a loss as they had paid fares using the old rate for a product whose price has nearly tripled.
Nigerian banks had been burnt due to lending to oil marketers in the past and have no appetite for further lending. Major oil marketers are better prepared to deal with the boom and bust of the oil market and the same resilience would be required of independent marketers. BusinessDay gathered that the Nigerian Midstream Regulatory Authority has invited marketers to a workshop where the implementation of the Petroleum Industry Act in the downstream sector would be articulated.
Some industry operators say the NNPCL still has to sort out the issues in the market with the hike in ex-depot prices.
Ex-depot price is the price marketers buy products at the depot and it determines the price at which they will sell to motorists.
Mike Osatuyi, national operations controller, IPMAN, in a conversation with BusinessDay confirmed the increase in ex-depot prices and noted that in two to three weeks, marketers will effect an increase in the price of PMS to consumers.
“If you want to order now for a truck, you will have like N21.8 million, we are going to increase it more than N500 because if I buy at N480/N495, what price will I sell?” he said.
He noted that going forward, it can be about N520 to N530. This will affect areas like Lagos, Rivers, Imo, Abeokuta etc. where the price is currently N488, N511, N515 and N500 respectively according to the Nigerian National Petroleum Company Limited (NNPCL)’s price update.
President Bola Tinubu during his inauguration announced that “subsidy is gone” sending the market into a tailspin as those who had the products quickly shut their pumps and long queues emerged across the nation.
The queues shortly after the NNPCL released price guidance for its over 900 stations across the country which showed petrol selling in Maiduguri at N577 per litre and N488 per litre in Lagos state while other places like Abuja, Jos, Lafia, Minna and Makurdi sold for N537 per litre, etc. Other marketers have since taken it as a benchmark.
Abubakar Maigandi, National Vice President Independent Petroleum Marketers Association of Nigeria (IPMAN), said depots have started releasing new prices while he lamented about NNPCL’s application of new prices on old stock.
“Again, we, the Independent petroleum marketers, have already purchased the product from NNPCL after eight months. Now they are saying they will give us the product for this new rate and not the old rate we paid at; these are part of the challenges we are encountering now,” he said.
Already, the NNPCL is set to discontinue crude oil swap in favour of cash payments for petrol imports which is part of President Tinubu’s plans to deregulate the petrol market and reduce the burden on government finances.
Mele Kyari Group chief executive officer of NNPCL has insisted that there will not be a reversal of the policy as there is no cash back-up to offset the subsidy payment for the month of June.