The price of Premium Motor Spirits (PMS) will be on the upward march again, going by the discussion between the Federal Government and oil marketers. Officially, PMS (better known as fuel) sells for N165 per litre but it has gone as far as N250 per litre in several parts of Nigeria, including the federal capital, Abuja in recent weeks.
On Wednesday, the Federal Government said it is engaging oil marketers on the cost of PMS, fuel queues, bridging claims payment, and related issues in the downstream oil sector. The outcome of the engagement is likely to be an upward adjustment in pump price, as oil marketers had repeatedly blamed the persistent fuel queues on the unsustainable cost of the product.
The Major Oil Marketers Association of Nigeria on (MOMAN) joined their counterparts in the Independent Petroleum Marketers Association of Nigeria (IPMAN) and the Natural Oil and Gas Suppliers Association (NOGASA) to call on the government to gradually raise PMS price.
IPMAN and NOGASA had earlier pushed for the upward review of petrol price, as some members of the former had already effected this by selling above the N165 per litre.
On the demands of the various marketers groups, the General Manager for Corporate Communications at the Nigerian Midstream and Downstream Regulatory Authority (NMDPRA), Kimchi Apollo told The PUNCH on Wednesday that the government was currently engaging the oil dealers. Asked if the meeting was being held with just MOMAN or all oil marketers, the NMDPRA spokesperson replied: “We cannot engage only MOMAN, we are engaging all of them. We are engaging them so don’t worry. You will know the outcome later”.
The Nigerian National Petroleum Company Limited, which is the sole importer of petrol to the country, however, declined comment on whether the cost of petroleum products would be raised on reduced soon because it is not a regulator of oil prices. A source in the company said: “We don’t have any kind of regulatory function in the sector. We are just operators now. It is the government that manages that. And based on the Petroleum Industry Act, we are no longer an appendage of government.
“The company is owned by Nigerians and the government is holding it in trust, but we don’t have any governmental role in terms of pricing, control or whatever. Although we are mandated to be the supplier of energy security, we are not a regulatory body”.
But the Secretary, Abuja-Suleja IPMAN, Mohammed Shuaibu, whose unit covers Abuja, Kogi, Niger and parts of Nasarawa and Kaduna, stated that though the association had informed the government about the issues in the sector, he was unaware of the meeting by the NMDPRA. He reiterated that the cost of petrol was unsustainable at N165/litre, stressing that some filling stations in Abuja were currently dispensing the product at N185/litre, as they now purchased the commodity above N168/litre from depots.
Shuaibu also noted that the indebtedness of the government to marketers with respect to bridging claims must be settled, otherwise the strike by IPMAN members would hold soon. “The cost of petrol at N165/litre is not sustainable. Bridging claims need to be settled and these are issues that should be addressed to avert the impending strike”, he stated.
Oil marketers continued to push for gradual phasing out of fuel subsidy instead of a total deregulation following the current product scarcity being experienced across the globe. MOMAN Chairman, Olumide Adeosun explained to reporters on Wednesday that the impact of the Russian/Ukraine war on businesses is “immense”, hence, the call on the Federal Government to gradually phase out subsidy to avoid “shock”.
“The effect of the Russian/Ukraine war cannot be compared to what we experienced during the COVID. What we are seeing is that countries are beginning to close borders against importers and products are being reserved for their own citizens alone. So Nigeria is also being shut out”, he said.
Adeosun said the government had ran the subsidy regime for too long, advising that the huge fund reserved for it should be diverted into growing other sectors including agriculture, health and education. “The Federal Government has allowed subsidy for too long and we haven’t saved for the raining days. The subsidy keeps increasing to the tune of N4 trillion. Such money would have been invested into Agriculture, health, education and others,” he stated.
In April, the Senate approved N4 trillion for fuel subsidy in the 2022budget following two separate requests by the President Muhammadu Buhari to the National Assembly.
He said: “MOMAN is not short of empathy for Nigerians at this time. The association is pro-business, pro-progress and pro-human. We, therefore, stand for phased deregulation of the downstream sector because we don’t want subsidy to be removed all of a sudden in order not to throw the masses into shock. We can no longer sell petrol at N165 because diesel is what we use in our operations. We use diesel to power our trucks, run our stations and depots, and as we all know, price of diesel keeps rising.
“The options we have now is to either save our businesses by shutting it down, or that the government should allow a gradual phasing out of subsidy by allowing price increase gradually. It is better to have products at a slightly increased price than not have products at all. The money for subsidy should be injected into another sector. No government can make the current crisis go away because it is a global one, and we all have to adjust”.