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Marketers hoard petrol over subsidy removal rumour

By BusinessNews Staff on June 2, 2015

Indications emerged on Sunday that some marketers of refined petroleum products, who were not sure of the new policy direction of the President Muhammadu Buhari-led All Progressives Congress government concerning the oil sector, had resorted to stockpiling the products.

Three marketers, who spoke to our correspondent, expressed optimism that the new government would look towards deregulating the downstream subsector of the petroleum industry.

It was gathered that the marketers believed that stockpiling petroleum products ahead of a likely deregulation would boost the value of the products when eventually they were made available to consumers after the sub-sector might have been fully deregulated, which automatically would result in petrol and kerosene being sold for higher prices.

As of Thursday last week, the eve of the handover to the new administration, the country was paying N41.57 as subsidy on every litre of petrol, according to data obtained from the Petroleum Products Pricing Regulatory Agency.

If deregulation eventually happens, consumers of petrol will be paying N128.57 for a litre of the product based on the current PPPRA pricing template of N87 official pump price plus the subsidy of N41.57.

Commenting on the development, a former Chairman of the Independent Petroleum Marketers Association of Nigeria, Western Zone, Mr. Olumide Ogunmade, said it was normal for the marketers to be apprehensive of possible changes that could come with the new government.

Ogunmade, who said the marketers as well as other Nigerians were expecting a change in policy as far as the current petrol subsidy programme was concerned, said, “Nobody expects the new government to continue with the status quo.”

He said with the depleted treasury inherited by the new government, among other challenges, its decisions could be pragmatic given the realities on the ground.

Marketers, he said, would likely take precautions so that they would not be caught unawares.

“We don’t know the policy of the new government, but we are expecting a change,” Ogunmade emphasised.

Commenting on the scarcity of petrol, which has not abated even after the petroleum tanker drivers and the National Association of Road Transport Owners called off their strike, he said major marketers were not importing petrol, a situation that has made the entire country to rely on imports by the Nigerian National Petroleum Corporation.

Ogunmade said the marketers were expecting the new government to come up with better policies and possibly deregulate the downstream sub-sector as the operators would not want a reoccurrence of the gross abuse that characterised the subsidy regime.

A top manager in one of the oil marketing firms located in Apapa told our correspondent in confidence that no marketer would want to be caught without enough products when a new government had just come on board.

According to the source, if the industry is eventually deregulated, the marketers will make more profits from petrol as the price will go up.

The manager added, “As we speak, some of us are stockpiling petrol, while awaiting the policy direction of the new government and how it will affect our business.”

Amid the uncertainty, Nigerians have continued to experience difficulties getting petrol at the official pump price. The few stations selling for N87 have continued to record long queues of desperate motorists and other users of the product.

Petrol, in some areas of Lagos, Ogun, Oyo and Osun states, is still being sold for between N120 and N150 per litre.

Most residents of the states could not watch the live telecast of the presidential handover ceremony on Friday, as they had to queue for petrol at filling stations, especially the ones selling it at the official pump price of N87.

Some of the stations where people were spotted on Friday morning were the Nigerian National Petroleum Corporation mega stations, as well as Oando and Ascon.

However, black market vendors of fuel have continued to thrive as price unevenness continues to characterise the market.

This trend has continued to put pressure on the finances of the masses as transport fares and prices of commodities, especially foodstuffs, have refused to normalise after rising at the peak of the petrol scarcity last week.

The Chairman, Nigeria Union of Petroleum and Natural Gas Workers, Lagos Zone, Alhaji Tokunbo Korodo, confirmed to our correspondent that loading of products had been intensive since the strike was called off. This, however, has not had an effect on the high prices at the depots.

Korodo described the flow of products at the depots as seamless, saying, “For us now, loading is done 24 hours of the day. We are also doing overnight loading to ensure that more product gets to Nigerians.”

The President, Petroleum and Natural Gas Senior Staff Association of Nigeria, Mr. Francis Johnson, said the body was mindful that Buhari had a blueprint to guide and direct his administration.

“On the general outlook, we are highly optimistic that President Buhari’s regime is determined to bring significant changes to how government business is conducted towards achieving effectiveness and curbing wastage of our resources and potential to improve accountability and optimisation across the economy,” he said.

On the way forward, Johnson said an abrupt removal of subsidy on petroleum products was not the solution as the move could create chaos that might ground the economy.

He, therefore, called for well-coordinated measures with timelines to achieve self-sufficiency in local petrol refining as an acceptable step to ending the subsidy regime.

“This should be combined with other strategies for effective optimisation of gas, especially for domestic and industrial uses, electricity generation and automotive energy. Such will create other affordable and friendly sources of energy,” the PENGASSAN president explained.

[Punch]

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