The Independent Petroleum Marketers Association of Nigeria (IPMAN) has warned that marketers will shut filling stations if the federal government attempts to regulate petrol prices, insisting that the downstream petroleum market is fully deregulated.
Speaking with TheCable on Thursday, Chinedu Ukadike, IPMAN’s
national publicity secretary, said the government should focus on ensuring
local refineries operate efficiently and encourage competition instead of
imposing price controls.
“As I advised, the government should concentrate on ensuring
our refineries are working and allow more sources of supply instead of talking
about regulation in a deregulated economy. If they do that, marketers will
protest and shut down their filling stations,” Ukadike said.
He also said petrol prices would continue to decline in line
with market forces, dismissing claims that marketers were profiteering from the
recent drop in global crude oil prices.
The spokesperson said competition among marketers would
naturally force prices lower, as consumers would patronise outlets offering
cheaper products.
“If you sell higher, people will go and buy where it is
cheaper. That is one of the forces of demand and supply, which regulates
price,” he said.
“So, the issue of whether government wants to regulate price
does not arise because the price will regulate itself through the forces of
demand and supply.”
Ukadike dismissed allegations that marketers were holding on
to expensive stock or profiteering at the expense of consumers.
“So, we don’t have an iota of trying to profiteer in line
with the statements that we reacted to. There is no profiteering. There is even
no hoarding. That’s the standard principle of monetisation,” he said.
“The more we buy cheaper, the more we sell cheaper.”
The IPMAN spokesperson acknowledged that petrol prices had
begun to decline but argued that expectations of a significant reduction
overlooked the pricing realities in the supply chain.
He said marketers purchase products based on prevailing
depot prices, leaving little room for excessive margins after accounting for
transportation and operating costs.
“We don’t have much interest on this. We should be expecting
the price to come down gradually,” he said.
Ukadike added that attention should instead be focused on
the pricing decisions of refiners.
“They should look at whether the price at which refiners are
selling to us corresponds with international crude prices and production costs.
If they don’t come out with those variables, they cannot say those buying from
refiners are wrong,” he said.
His comments come after the Federal Competition and Consumer
Protection Commission (FCCPC) accused marketers of failing to pass on the
benefits of lower global crude oil prices to consumers, saying recent
reductions in pump prices do not commensurate with the sharp decline in crude
prices.
The criticism followed a decline in international oil prices
after tensions in the Middle East eased.
Brent crude fell to about $71 per barrel on Monday, after a
ceasefire agreement between the United States and Iran reduced concerns over
supply disruptions through the Strait of Hormuz.
Also weighing in on the issue, Billy Gillis-Harry, national
president of the Petroleum Products Retail Outlets Owners Association of
Nigeria (PETROAN), urged refiners, depot owners and importers to reduce
ex-depot and retail prices to reflect lower crude prices.
According to Gillis-Harry, the development highlights the
need for a more competitive downstream petroleum market.
He said the drop in international crude oil prices presents
an opportunity for operators in the downstream sector to reduce prices and
provide relief for consumers.
Also, Taiwo Oyedele, minister of finance and coordinating
minister of the economy, said the federal government is engaging oil marketers
and regulators to ensure reductions in global crude oil market prices are
reflected more transparently in the pump price of fuel.
However, Oyedele said the government is seeking a balance
between protecting consumers and allowing operators in the downstream sector to
remain commercially viable.
The minister said marketers are often quick to raise pump
prices when crude oil prices increase because of replacement costs, but slower
to reduce prices when crude prices fall due to existing inventory.
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