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Filling stations make N184m profit daily on petrol

By on March 20, 2015

Filling stations across the country make approximately N184m profit daily from the sales of Premium Motor Spirit (otherwise called petrol).

They are making N4.60 on every litre of petrol sold to final consumers, according to the Petroleum Products Pricing Regulatory Agency.

With the Pipelines and Products Marketing Company, a subsidiary of the Nigerian National Petroleum Corporation, putting the daily consumption of PMS in Nigeria at 40 million litres, filling stations, therefore, are said to be making a total of N184m as profit daily from the product.

But oil marketers under the aegis of the Major Oil Marketers Association of Nigeria, had in recent times, called for an upward review of the margin/profit they get per litre of petrol.

They had called for adequate margins that would cater for rising overheads in the petroleum downstream business.

The marketers also said the devaluation of the naira would continue to have a negative impact on the pricing of petroleum products.

MOMAN described the country’s petroleum downstream subsector as a poorly regulated sector considering the degree of anomalies that had characterised operations in the sector over the years.

The association, therefore, called for complete deregulation of the downstream subsector of the petroleum industry, saying the move would encourage private investments in the subsector, especially in the area building refineries in the country to locally refine crude produced within the shores of Nigeria.

The Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore, said the oil industry needed very strong regulatory frameworks as is the case with some critical sectors of the Nigerian economy.

As of Monday this week, the amount payable as subsidy on petrol by the Federal Government to oil marketers had risen by over 1,142 per cent in seven weeks.

As of January 21 this year, the amount payable as subsidy by government was N2.84 per litre of petrol, but latest data on the PPPRA’s website on Monday this week showed that the amount payable as subsidy per litre of petrol was N35.28.

The PPPRA puts the current landing cost of the product at N106.79 per litre, while the total cost comprising landing cost and distribution margin was put at N122.28. However, the product still sells for N87 per litre on pump price basis.

Components that make up the landing cost include: cost and freight (N95.23); traders’ margin (N1.47); lightering expenses (N4.16); NPA (N0.77); financing (N1.37); jetty depot thru put charge (N0.80; and storage charge (N3.00).

Components making up the distribution margins include: retailers (N4.60); transporters (N2.99); dealers (N1.75); bridging fund (N5.85); marine transport average (N0.15); and administration charge N0.15).

As of February 27 this year, the Federal Government was said to be paying N1.38bn as subsidy per day on petrol consumed within the country. It was said to be paying a subsidy of N34.51 per litre of petrol as of this date.

Figures from the Pipelines and Products Marketing Company, a subsidiary of the Nigerian National Petroleum Corporation, show that Nigeria consumes 40 million litres of petrol daily; and with N34.51 per litre payable as subsidy, over N1.38bn is said to be paid as total daily subsidy on the product.

The PPPRA had put the product cost and freight elements of imported petrol at N94.46; with other cost items like traders’ margin, lightering expenses, NPA, financing, jetty depot thru put charge, and storage charge were put at N1.48, N4.16, N0.78, N1.34, N0.80, and N3.00 respectively then.

The landing cost for petrol then, according to the agency, was N106.02.

The PPPRA also pegged various distribution margins for retailers, transporters, dealers, bridging fund, marine transport average, and administrative charge at N4.60, N2.99, N1.75, N5.85, N0.15, and N0.15 respectively.

Total cost (open market price), according to the agency’s data was N121.51.

Data from the PPPRA on February 16 showed an over 6.9 per cent increase in subsidy payable by the Federal Government to oil marketers within five days.

The agency had put the total cost of petrol at N102.82 per litre for February 16, with a subsidy of N15.82 per litre of petrol.

As of February 9, the total cost per litre of the product was put at N101.79 as of February 9, with a subsidy on the product pegged at N14.79 per litre.

The Federal Government had on Sunday, January 18, 2015, announced the reduction in the pump price of petrol to N87 from N97 per litre, attributing this to the decline in global crude oil prices.

Subsidy on PMS stood at N12.27 per litre on February 3 as the PPPRA put the Expected Open Market Price (total cost) of the product at N99.27 per litre, up from N95.47 on February 2, and N88.23 on January 29. The subsidy was N8.47 per litre on February 2.

The PPPRA put the combined product cost and freight charges at N76.88 per litre on February 16. The same was N75.90 per litre on February 9, up from N73.46 on February 3 and N69.79 on February 2.

The landing cost, which is the sum of the product cost, freight rate, traders’ margin, lightering expenses, Nigerian Ports Authority fees, financing cost, jetty depot throughput charge and storage charge, increased to N87.33 per litre.

The landing cost was put at N86.90, N83.78 and N79.98 per litre on February 9, 3 and 2 respectively.

 

 

[Punch]