Fuel scarcity to persist till mid April

The fuel shortage that has engulfed the country in the past one month may not improve until the middle or end of April as many marketers are currently finding it difficult to finance the import allocations they recently got from the Petroleum Products Pricing Regulatory Agency.


Our correspondent gathered on Sunday that a significant number of the independent marketers, who got import allocations from the PPPRA, were finding it difficult to finance them as banks had refused to raise Letters of Credit for them.

Though the Federal Government still owes the marketers substantial subsidy claims, many of those affected, who are considered small, are said to lack the financial muscle to attract more loans from the banks without paying what they currently owe.

“The marketers are facing financial challenges because they are finding it difficult to finance their import allocations. The supply situation may not improve until the middle of April; and if care is not taken, it may last till the end of April,” an industry source, who asked not to be named, said.

The country’s daily petrol consumption currently stands at 35 million litres, but since fuel scarcity began last month, the market has been under supplied. As such, there has been cyclical shortage as the supply has failed to meet the demand.

The Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore, who spoke with our correspondent on Sunday, said it was true that the Federal Government owed the marketers huge subsidy claims.

“For us as majors, it is not totally true that we are facing financial constraints towards importing petroleum products, but for some smaller marketers, this may be true and that is why it is important for the government to pay subsidy claims as and when due,” he said.

Already, fuel depots have increased the ex-depot price of Premium Motor Spirit (petrol) from N87.70k per litre to over N100.

Our correspondent, who monitored the situation in Lagos over the weekend, found out that petrol, which the marketers normally buy for N87.70k per litre, was being sold for over N100 across different depots.

Specifically, a litre of petrol was on Friday sold for N103 at the Nigerian National Petroleum Corporation’s Ejigbo depot.

NIPCO, an indigenous downstream player, before its closure last week, loaded a litre of petrol at N95, about N7.30k higher than the ex-depot price.

An industry source, who spoke under the condition of anonymity, said the market remained grossly under-supplied and that the marketers were taking undue advantage of the situation.

“The supply is not meeting the demand and marketers are struggling with meeting the supply. Some depots are selling for as much as N99.90k,” the source said.

Consequently, marketers have also increased the pump price of petrol from N97 to between N110 and N120 per litre.

The Chairman, Nigerian Union of Petroleum and Natural Gas Workers, Western Zone, Mr. Tokunbo Korodo, said the increase in the pump price of petrol was because the product was not being made available to the marketers.

He said, “Some of the marketers are now patronising black marketers who sell above the pump price.

“The few ones selling at the pump price have seriously adjusted their pumps by selling lesser quantity that does not correspond to the money the masses are paying just to avoid closure of the stations by the DPR.”

A litre of fuel was sold at N100 at the MRS filling station located at the Ojodu Berger axis of the Lagos-Ibadan Expressway on Friday. Magix X, a filling station adjacent to the Excellence Hotel, Ogba, Lagos, charged extra N100 for every 10 litres of petrol purchased by customers on Saturday.

A marketer, who runs a filling station very close to the NNPC Ejigbo depot, sold a litre of petrol for N110 on Saturday.

He explained that the price had increased across the retail outlets because marketers were procuring the product at a higher cost.

For instance, the marketer said he loaded petrol at the Ejigbo depot at N103 per litre; paid N2 to transport it to his outlet and added another N5 margin, thereby selling the product at N110 per litre to the consumers.

A senior official in one of the private depots said loading expenses and union dues were also adding up to the already hiked ex-depot price of petrol, thus making the product more expensive for motorists and other consumers.

The source also warned that customers could not be sure of the quality and quantity of the product wherever it was being sold for N97 per litre.

The Managing Director, Pipeline and Products Marketing Company, Mr. Haruna Momoh, who responded to an SMS enquiry by our correspondent, said, “The NNPC ex-depot price for the PMS is N87.66k. This price is uniform in all the NNPC depots nationwide. Your assertion is, therefore, wrong and, indeed, misleading in all material particular. To say that the NNPC Ejigbo depot loaded on Friday at N103 is a figment of somebody’s imagination, a congenital and pathological lie.

“Our ex-depot price must not be confused with the price at which unscrupulous elements or marketers sell the PMS at the tarmac outside of our depot, after buying from the NNPC at the official price.

“You may wish to ask the PPPRA, DPR, MOMAN and IPMAN. All the NNPC retail stations sell at the official price, just like our depots do.”

Olawore blamed supply shortage as being responsible for the current price hike and product hoarding in the country.

“If the supply goes round, nobody will hoard petroleum products and nobody will sell above the pump price. No major marketer’s station should sell above N97. Anybody doing that is on his own,” he said.

He also blamed the delayed release of the import allocation for the first quarter of 2014 by the PPPRA as the remote cause of the ongoing fuel scarcity in the country.

Olawore said, “The allocation was released three weeks ago. When you get an import allocation, it will take at least between 24 and 48 hours before you get an import licence from the Department of Petroleum Resources. It is when you get this that you go to the bank to get the LC. It is when you get the LC that you will be sure that your supplier will give you the product.

“If your supplier is in Europe, he will need at least 14 days to sail from Europe to Nigeria. That is why we always say that import allocation should be released on time.”

Punch