On Tuesday, oil marketers challenged the Federal Government’s stance, asserting that the current pump price of Premium Motor Spirit, commonly known as petrol, should not fall below N800 per liter in the absence of a subsidy on the commodity.
Petrol is presently priced between N580/litre and N617/litre, varying by location, while the Federal Government, via the Nigerian National Petroleum Company Limited, has refuted claims of reintroducing PMS subsidy.
Mele Kyari, the Group Chief Executive Officer of NNPCL, dismissed the notion of a petrol subsidy reintroduction on Monday. He attributed the sporadic queues at gas stations nationwide to distribution challenges from the South to the North, not a shortage of supply.”
No subsidy whatsoever. We are recovering our full cost from the products that we import. We sell to the market, and we understand why the marketers are unable to import. We hope that they do it very quickly and these are some of the interventions the government is doing. There is no subsidy,” Kyari had stated.
He asserted this statement just two days after the confirmation of fuel subsidy’s return by the Petroleum and Natural Gas Senior Staff Association of Nigeria.”
Furthermore, oil marketers had previously emphasized multiple times that fuel subsidy was back, citing the landing cost of petrol at N720/litre as of last week.”
On Tuesday, they criticized the NNPCL boss for denying the government’s PMS subsidy, outlining the reasons behind the resurgence of the subsidy on petrol.”
“I don’t know why the government keeps peddling lies. When they removed the PMS subsidy, a dollar was about N700 and they made us believe that the removal of subsidy would make the supply of products play according to the dictates of demand and supply, looking at forex as the benchmark.
“Now, this is just simple arithmetic, if you removed the subsidy when a dollar was about N700 and today the dollar is more than N1,000, and you are still supplying and giving products at almost the same rate, what is the magic? They are subsidising products as we speak.
“They are spending billions of naira to subsidies products, and because they know that this country may go on fire if Nigerians buy products at about N1, 000/litre, they keep twisting facts. Why can’t they come out and tell the world the truth?” the National Secretary,
He pointed out that the government removed the subsidy without thoroughly considering the complexities involved before making the decision.”
“You cannot wake up overnight and remove subsidy without considering the pros and cons, only for you to wake up again and start putting back the subsidy into play secretly, and you think Nigerians will not know,” he stated.
Asked to state the implications of these concerns in the downstream sector, Kekeocha replied, “I am telling you that in a very short time there will be no product anywhere in this country, apart from the tank farms that have access to diesel.
“This is because many marketers cannot even function well with the cost of diesel. Check the cost of diesel and the cost of supply and distribution. How many marketers can do it and sell at about N600/litre? The cost of landing PMS is over N700/litre.”
Explaining the effect of the cost of diesel on the operations of filling stations, the IPMAN official stated that “when you compute the cost of bringing PMS from Warri to Abuja or other Northern states by an independent marketer, it will land here (North) at more than N700/litre.
“The cost of diesel is now very high and many marketers can’t afford it, and still sell to compete with the tank farm owners who sell at about N617/litre. Consumers cannot see where the product is sold cheap and go to where it is costly.”
Kekeocha, however, noted that tank farm owners involved in retailing of petrol were few, stressing that such category of dealers were very limited when compared to independent marketers.
Independent marketers control about 80 per cent of filling stations across the country, as a reduction in their operations is going to lead to scarcity in many locations, particularly areas that lack major operators that have tank farms.
“So independent marketers cannot compete right now due to the high cost of diesel and the inability to import due to forex issue, which is why you see that the number of functional filling stations nationwide have been reducing on a daily basis,” the IPMAN official stated.
On whether stabilizing forex would help the situation, Kekeocha said, “The government cannot address forex because it is not within their control. If the government has to address forex, it means it still has to make it clear that they have decided to bring back subsidy.