The Nigeria Midstream and Downstream Regulatory Authority (NMDRA) has cleared the air on the confusion created by a recent media report that the volume of Petrol or Premium Motor Spirit (PMS ) consumed in the country has dropped to 4.5 million litres per day.
Farouk Ahmed, chief executive officer of the NMDRA cleared the air on the sideline of the ongoing 18th Africa Downstream Energy Week with the theme ‘Alliances For Growth’ holding in Lagos, Nigeria.
He stated that the national consumption level is between 45 million litres a day and 50 million Litres.
“The current volume consumed by Nigeria which is trucked to the market ranges between 45 million litres and 50 million litres, including the buffer that exists. However, we see a lot of activities going on now, because during the fourth quarter of the year, especially towards Christmas, usually, the industries experience a high volume of activities. But after this, we can see the consumption go down. We hope that this price adjustment or liberalization will discourage cross-border smuggling of the product because there will be less incentive to go across the border, meaning that the product will remain in- country. After this, we can see the level between real supply and actual demand in the market”.
He, however, stated the volume could go further down but certainly not to 4.5 million litres per day.
On the theme of the conference which is ‘Alliances for Growth, he said: “Generally speaking we are talking about alliances which is collaborations, and this is what the authority is trying to promote in terms of facilities among the stakeholders.
Instead of having private depots all over the place, we can have a few and use them more efficiently, whether it is in terms of trucking or retail outlets. Of course, it is good to have things in abundance, but when you look at the economy of scale and the cost, you can see a lot of downtime or idle petrol stations and private depots.
In other words, collaboration or alliance will bring all the stakeholders together for the sake of efficiency and cost reduction for the consumers.”
He said, for instance, if there is a common facility for NMDRA, NIMAS, and NPA for use or they are jointly working in one room, this would remove a lot of inefficiencies. Alliances give more transparency and clarity in the conduct of the businesses of the stakeholders.
On whether the Authority is thinking of putting in place rules and regulations that will enhance such alliances among Nigeria operators, he said no, stating that it is a business case for individual promoters, adding that the authority cannot say that they should merge, but rather they can be encouraged to look at their business case to see if actually, it is profitable for them to invest in saturated areas.
“ If we look at other areas of engagement, of course, we can leverage the different experiences of the stakeholders, and maybe they can create a more efficient system for the benefit of everyone.
According to him, the key issue really is to reduce costs for consumers. With such an alliance in place, the cost of the product for consumers will be low. But if the infrastructures are in places where they are mostly idle, the cost of product to the consumer will be high, because every promoter is expected to recoup his investment. “This is why we are trying to promote the idea of collaboration.”
He stated that it is part of the plan anyway to see that anybody who brings the project, the Authority will look at the viability of the project and its implications on the consumers.