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Q1 allocations: NNPC earned it from marketers’ past failures – PPPRA

By on January 12, 2016

The Executive Secretary of the Petroleum Products Pricing Regulatory Agency (PPPRA), Mr. Farouk Ahmed, at the weekend explained why the agency decided to allocate 78 per cent of the total volume of 3.1 million metric tons of petrol to be imported into the country in the first quarter of 2016 (Q1, 2016) to the Nigerian National Petroleum Corporation (NNPC).

Ahmed said in Abuja that because of the inability of some oil marketers to meet previous import allocation quotas that were issued to them, due to the difficulty in accessing the needed foreign exchange, the PPPRA opted to allocate a larger volume of the importation to the NNPC.

He noted that the NNPC was benefitting from the seaming shortcomings of private marketers to uphold the terms of their allocation papers, adding that it was sure about supplies from the NNPC.
“We gave 78 per cent of the import allocation to NNPC because we are sure that it can source for foreign exchange through crude oil sales to finance its importation.

“If we go back to recent historic trends, especially in the last six months, you will discover that most marketers have had difficulty in raising Letters of Credit due to lack of forex,” Ahmed said.
He however dismissed the insinuation that the import allocation was skewed to ease out private sector marketers from doing business in the country’s downstream petroleum sector, and engender NNPC’s monopoly.

According to him, even the foreign exchange requirement for the 22 per cent import allocation to other private oil marketers in the Q1 was being covered by both the NNPC and the Central Bank of Nigeria (CBN) to ensure that they meet  the required performance.
Ahmed therefore said: “The whole idea is to give whatever possible support to the marketers in order to enable optimum service delivery, while ensuring stability in the system.”

He said on reported disparity in the official pump prices of fuel across the country that the ongoing massive importation and distribution of petrol across the country by the NNPC would through the instrument of market competition help address the price disparity when NNPC supplies get to every nook and cranny of the country.

“This problem is being tackled in two ways. Firstly, with the support of the Minister of State for Petroleum Resources, PPPRA and DPR are working hard to ensure compliance. Secondly, once product is abundantly available it becomes a straight issue of supply and demand and competition for market share. And that is the whole idea,” he said.
Ahmed said the worst days of fuel supply and distribution challenges are over, adding that in the days and weeks ahead, the country would witness improved sanity in product distribution.

“What happened was that some marketers were hoarding in anticipation of a price increase, but that did not happen, so everybody is now releasing their stock into the market and coupled with the massive importation by NNPC. We are indeed hopeful that the worst days are over, although we still have to be a bit patient,” he stated.

 

 

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