…cost of credit soars
…El-Rufai hits NNPC again
Despite Nigerian National Petroleum Company Limited changing role with importers of fuel by asking them to supply fuel upfront, as against the usual practice of giving them crude oil and the suppliers return fuel, there is no respite for Nigerian consumers.
Typically, NNPC gives crude oil upfront in lieu of gasoline cargoes in return, however, in light of the fact that there is shortage of crude due to vandalism or theft; suppliers are required to supply gasoline upfront.
This situation may be more challenging as Christmas get closer and the general elections follow immediately. Nigerians should prepare for trying periods ahead, an industry operator said.
This means that Nigerians may continue to groan under the lack of Premium Motor Spirit (PMS) or petrol for a long time to come as both the Nigerian National Petroleum Company Limited and the Federal Government lack the financial muscles to meet the nation’s fuel demand.
The refusal of the Federal Government to deregulate the downstream sector of the petroleum industry is causing the country to bleed financially, all the efforts made to encourage the government to remove the price cap were thwarted by the government itself.
According to industry sources, the problem relating to fuel scarcity has been gathering momentum long before the devastating floods. Before the floods, the NNPC has been having problems meeting its financial obligations to importers, and it was just a matter of time before the scarcity begins to manifest. Blaming the situation on the flood which only aggravated fuel scarcity was a cover-up by government agencies.
NNPC keep saying there are over 1.8 billion litres of fuel, however, the fuel it is claiming belongs to importers/contractors that are not ready to release them until they are paid the money owed by NNPC, a source said.
When the flood happened, the Nigerian Midstream and Downstream Regulatory Authority (NMDRA) quickly went to town with a statement that floods have prevented oil trucks from moving from the southern part of the country, especially, from Lagos to the North.
Now that the flood has receded and the roads are free, the same NMDRA is claiming that the roads are terribly destroyed and because of that, it takes a truck laden with PMS several days to get to Abuja from Port Harcourt, Warri or Lagos.
An official of NMDRA was asked on Friday why there was scarcity of fuel in Abuja, he said, the roads are so bad. When pressed further to also state why Lagos is also experiencing fuel scarcity, is it because of bad roads also? He simply told Business Standards, I will get back to you.
He did not get back. Attempts to reach him on his mobile phone were not successful.
Business Standards Investigation has however revealed why there is fuel scarcity. The real problem is that the NNPCL owes contractors and has no money to pay these importers/contractors that bring fuel to the country.
NNPCL problem according to some industry sources is that its crude oil intake has been grossly affected by the level of crude oil theft the country has been experiencing. This has taken its toll on the NNPCL’s share of crude oil to the extent that it is no longer getting crude oil to service its Direct Sale and Direct Purchase (DSDP) programme.
An industry source described the situation this way: “Pipeline vandalism led to crude oil production cut. This has impacted crude export and consequently no revenues. The Federal Government has no money to pay importers.”
The source further stated that blaming the current scarcity on floods was a cover-up, stating that Importers bring in fuel to Nigeria but would not release the product until they are paid.
The fuel situation distribution at the depots in Apapa, Lagos is terrible, as the NNPCL seems to have abdicated its role as the only supplier of fuel to marketers.
Only a few marketers have access to the few volume NNPC is able to bring into the country and these few release the product to oil marketers/dealers at the ex-depot price that is convenient for them while jettisoning the official ex-depot price.
The ex-depot price at some of the depots ranges between N184 to N189 per litre, hence, the pump price ranges between N190 per litre in some places in Lagos and N260 in Kano, N220 in Uyo, Akwa Ibom State.
These pump prices have not prevented the long queues that have suddenly become the order of the day in some filling stations because a good number of other filling stations are not having fuel to sell
What is even more appalling is the fact that some notable marketers would get products at the approved NNPCL price rate but they would in turn sell the product to less visible marketers that don’t care about the official price. This is exactly what is playing out in places like Kano and so many other states.
Officials of NMDRA are watching the situation helplessly because there is nothing they can do, an official said.
Meanwhile, Governor Nasir El-Rufai of Kaduna State has lamented that the inability of the Nigerian National Petroleum Company (NNPC) Limited to remit any revenue into the federation’s account since the beginning of this year has put many states into severe financial distress.
El-Rufai raised the concern at the 2022 Tax Dialogue organised by the Kaduna State Revenue Service held in the state capital on Monday.
He said the federal and state governments now rely on revenues and taxes generated by the Federal Inland Revenue Service and Nigerian Customs Service for survival.
According to him, the situation has led to the inability of most states to pay salaries and fulfil their social contract to citizens.
Also speaking at the event, the Executive Chairman of Federal Inland Revenue Service (FIRS), Muhammad Nami emphasised the importance of tax dialogue as a tool for engendering tax compliance and a means of strengthening tax systems.
While emphasising the importance of dialoguing on tax payment, the Director General of Nigerian Maritime Administration and Safety Agency (NIMASA), Bashir Jamoh also stressed the need for inclusivity, fairness and pooling expert ideas to aid tax policy formulation and administration.
According to them, tax authorities must create effective communication and trust strategies and also ensure taxpayers receive value for taxes paid, which are the two key drivers of voluntary tax compliance.
Last month, El-Rufai said the Federal Government has failed in the oil and gas business and should get out of the sector.
He said nothing has changed with the commercialisation of the NNPP in July 2022, adding that NNPC is Nigeria’s biggest problem and should be privatised.
“This year, NNPC has not brought N20,000 to the federation account. We are living on taxes. It is PPTs, royalties, income tax and VAT that is keeping this country going because NNPC claims that subsidy has taken all the oil revenues. I don’t believe it,” El-Rufai noted.
Olusola Bello