Oil & Gas
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THE Nigeria Labour Congress has warned the Federal Government against any further increase in the pump price of petroleum products, especially Premium Motor Spirit, otherwise called petrol. The warning is coming as the retail stations of the Nigerian Petroleum Corporations in the Federal Capital Territory and its environs have increased the pump price of the PMS to N145 from the initial N141.
Similarly, some private marketers of petroleum products are now selling petrol in their outlets at N150 per litre. One of our correspondents reported that some filling stations in Lagos and Ogun states had refrained from selling the product.
For instance, the Oando filling stations at Alapere and Berger as well as the Mobil filling station opposite the Magodo Estate gate did not dispense the product to members of the public since Friday. Similarly, the Ascon and NNPC stations between Arepo and Magboro, off the Lagos-Ibadan Expressway, Ogun State, did not sell the product on Sunday, raising fears of another round of fuel scarcity.
The General Secretary, NLC, Dr. Peter Ozo-Eson, told one of our correspondents on the telephone on Sunday that it would be insensitive on the part of the government to increase fuel price in view of the current hardship in the land.
Ozo-Eson added, “Well, we have been clear on this matter from the beginning that once you submit the determination of the prices of the products to the market, the way they are doing it in an import regime that will devalue the naira. Therefore, they will come back and tell you the prices are not realistic. We knew that from the beginning and we said so. The fact of the matter is that any attempt to increase the price of fuel now, given the level of hardship and the level of suffering Nigerians are going through, will be regarded as extremely insensitive.”
The NLC secretary pointed out that while the NLC was opposed to any further adjustment in the price of fuel it was up to Nigerians to also decide how to live with such an adjustment. He stated, “We do hope that Nigerians will realise that this has no end, and what the government is doing will continue to impose extreme hardship on them, and they need to tell the government that enough is enough.
“Other than that, we oppose any adjustment in the pump price. If the government goes ahead to do it, it will indicate what we hinted right from the beginning that the policy adopted was wrong, and it remains wrong. It is up to Nigerians to oppose it. We provided the necessary leadership based on our understanding of the issues and the reality is coming home to roost and it is never too late. Nigerians will have to take the decision as to how they have to live with it.”
While the Petroleum Products Pricing Regulatory Agency refused to confirm or deny any plan to adjust the price of petrol, one of our correspondents quoted officials of marketing firms as blaming the increase in the pump price on the high cost of the commodity at depots. The pricing template of the PPPRA for PMS was last updated on May 24, 2016 and it had the pump price at a band of N135 to N145 per litre.
When asked to comment on whether the PPPRA was on the verge of hiking petrol price, the agency’s Acting Executive Secretary, Mrs. Sotonye Iyoyo, stated that forex had remained a challenge and noted that the agency works with the prevalent market fundamentals when determining or fixing petrol price.
Iyoyo said “Today as we know there is scarcity of foreign exchange and when we want to fix prices we look at the market fundamentals. We don’t just fix prices without looking critically at the fundamentals of the market. There is a price band that is between N135 and N145. The maximum is N145, and so anyone selling at that price is still within the price band.”
A source told one of our correspondents that marketers had stopped importing petrol into the country because the landing cost had gone beyond what the PPPRA stated in the template for the product and the government, through the NNPC, had failed to meet its promise of supplying the importers’ forex needs.
The source explained that due to the crisis in the Niger Delta, the NNPC was finding it difficult to generate enough forex from crude sale as the nation was losing an average of one million barrels per day to the bombing of crude pipelines and vandalism of critical infrastructure.
According to him, the marketers have resorted to getting the product from the Pipelines and Product Marketing Company at around N132 per litre, whereas the actual landing cost of the product is between N136 and N137 per litre, adding that the NNPC was currently subsidising the cost of petrol.
However, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has faulted the increase in the pump price of petrol by the NNPC mega stations and other private filling stations. The minister, who said the price increase was done without his knowledge, said he would investigate the development, adding that he would also meet with oil marketers to discuss issues concerning fuel price.
Speaking on the sidelines of an award ceremony and dinner organised by the PPPRA branch of the Petroleum and Natural Gas Senior Staff Association of Nigeria on Saturday night, Kachikwu said the instability in the foreign exchange market had been a challenge to the oil importation business.
When asked if the N4 increase in the pump price of petrol by the NNPC stations was a sign of an imminent hike in the rate, the minister said, “First, I am not aware that the NNPC has increased the price. I need to look into that; it is a bit of surprise for me because there are processes in doing this. If they have done that, it means they are doing it wrongly. Let me find out what the facts are.
“Having said that, the reality is that what we did at the point when we did some liberalisation was to enable the free market to float the price. Obviously, as you look at foreign exchange differentiation and all that, it will impact (on the pump price). The worst thing you can do is to go back to an era where we basically will be fixing prices. What we ought to be doing is to watch the prices, making sure that they are not taking advantage of the common man, making sure that the template is respected. One of the things I think we had hoped to do, which we should still do before we embark on any price increase, is to work on that template.”
Kachikwu stated that despite the harsh reality with respect to forex availability, the government was ready to tweak some of the components making up the price of petrol in order to forestall any increase in price.
He said, “There are still areas that are within the government’s control like payments to the Ministry of Transportation and the rest, and payments to the Nigerian Ports Authority that are foreign-currency denominated. We are working on the possibility of being able to shift that out so that you still can modulate the prices within where it is right now. But I will hold a conversation with the industry and see how it is going.
“However, what is key is that I never want to see fuel queues back. Those who are investing must be able to predict the pricing methodologies, the pricing consequences and the actions to be able to justify their investments. At the end of the day, I think the PPPRA is the one that has the authority to say it is time the template does justify some level of movement, otherwise you have a crisis of individual decisions on pricing.” – Punch
— Nov 7, 2016 @ 13:32 GMT
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