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Again, PPMC, Marketers defy FG on new ex-depot price of petrol

By on January 20, 2016

The Pipelines and Products Marketing Company (PPMC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC) and most of the oil marketing companies were yet to implement the new ex-depot prices of petrol at the weekend, THISDAY’s investigation has revealed.

Since the new price regime came into effect on January 1, 2016, the marketers have argued that all the basic assumptions, permutations and projections by the government in the new pricing model are unrealistic in view of the high cost of foreign exchange.

Under the revised pricing template by the Petroleum Products Pricing Regulatory Agency (PPPRA), the government had approved two pump prices –one for the retail outlets of the NNPC, which would sell at N86 per litre, and another for the retail outlets operated by the private oil trading companies, which would sell at N86.50 per litre.

With the new pricing, the ex-depot price of petrol has also potentially dropped to N77 per litre, against the previous official price of N77.66 per litre, with effect from January 1.

But THISDAY’s investigation revealed that in most of the depots where the PPMC is selling its imported products, the ex-depot price is still higher than the N77 approved by the government.

The private marketers have also not adjusted to the new price at the depots due to mounting concern on the economics of the new pricing model in the face of myriad of challenges facing the downstream operators in the areas of sourcing products and foreign exchange.

THISDAY gathered that while PPMC was selling at ex-depot price of N85 per litre at Capital Oil Depot and N86 at Heyden Petroleum Depot, none of the private marketers was selling at N77.

For instance, AA Rano was selling at N85 per litre; MRS sold at N90.50; Folawiyo sold at N86, while most of the depots did not have petrol at the weekend.

Some of the empty depots include: Acorn; Aiteo; Asco, A-Z; Bovas; D-Jones; Eurafric; Gulf Treasure; Hensmor; Rahamaniyya; SaharA Energy; SPOG; Swift Oil and Obat Petroleum.

The government’s decision to reduce the official prices of petrol stemmed from the slump in the international market price of crude.

It was gathered that with the drop in the price of crude, the Expected Open Market Price (EOMP) of imported petrol had slumped to about N86.29K per litre for the private marketers and N85.93K for the NNPC.

This implies that the product could be sold at these prices without the marketers and the NNPC being paid subsidy or incurring losses.

With the approval of the pump prices of N86 .50k for the marketers and N86 per litre for the NNPC, it is expected that both the marketers and the corporation will refund part of the money as “over-recovery” to the government, since the new pump prices exceed the market prices in a deregulated regime.

However, the operators are said to be reluctant to implement the new prices due to the other challenges, which have made the assumptions in the new pricing template unrealistic.

Some of the marketers, who spoke on condition of anonymity, had told THISDAY that government’s position on the new pricing did not reflect the actual market realities.

“All the government’s permutations, assumptions and projections in the new template are unrealistic in view of the crisis we are facing in sourcing foreign exchange. We can’t find foreign exchange. So, the margins in PPPRA template do not reflect the actual market margins,” said one of the marketers,” one of the marketers had argued.

 

[ThisDay]