….monopoly is causing Fuel Price Spike In Nigeria, Say Experts
Stakeholders in the oil and gas have asked the government to prevent a situation where the country transits from an import monopoly to refining monopoly in the country. They attributed the current hike in the price of petrol to the monopoly being enjoined by the Nigerian National Petroleum Company (NNPCL).
The stakeholders who spoke at the Quarterly Press Engagement organised by the Major Energy Marketers Association of Nigeria (MEMAN) on Wednesday, called for a truly fair and competitive petroleum downstream market to keep the supply and prices of products at a reasonable level.
Speaking at the forum the former Chief Operating Officer, Upstream of NNPC, Bello Rabiu, said that the removal of subsidy as declared by the Federal Government was not enough to depict deregulation, but it also requires the creation of a competitive market environment that will guarantee the supply of products at commercial prices to customers.
According to him, the only supplier of petrol in Nigeria today is NNPC. This is a monopoly, which is against deregulation procedures.
He said: “With consumption capacity estimated at One Million MT (1.341 billion litres) of currently being supplied through DSDP importation program of NNPC, whereby local and international traders are contracted to lift Nigerian crude oil owned by NNPCL and deliver Petroleum Products Ex-Lagos.
“This remains the only supply source of PMS in the Nigerian Market due to the inability of other players to secure forex for direct importation. Thus, NNPC is effectively the only supplier of PMS in Nigeria today.
“Being the only supplier and importer of PMS in Nigeria, NNPC is currently the determinant of PMS price as other players are only adding their margins to arrive at pump price depending on location,” he said.
With the scrapping of PEF and based on the foregoing, retail price of PMS across the nation depends on the NNPCL landing cost, availability of the products along the downstream value chain as well as the realizable margins by other players from Jetties to retail stations, Regulators/MDAs such as NPA, NIMASA and NMDPRA.
He therefore called for a review of the current business model and institutional arrangements of the deregulation policy which has resulted in one dominant player (NNPC) power to import and fix the prices of PMS across the nation.
This, he said, is not consistent with the provisions of PIA 2021 which envisages the participation of multiple players operating under open competitive environment with multiple supply sources from import and domestic refineries under a level playing field aimed at delivering products at the lowest possible prices at the pump.
“Under the current model, No one knows the actual cost of importing a litre of PMS into the Nigerian market except NNPC. NMDPRA no longer publish the pricing template to enable the citizens know the official landing cost of any product Ex-Lagos since the announcement of full price deregulation and total removal of PMS subsidies,” Rabiu said.
According to him, this situation has resulted in a total lack of accountability and substantial revenue leakages that cannot be quantified due to lack of transparency in the process.
He said: “ If we can be told what Customs duty is daily in Nigeria, we should be equally told how much is the fuel being imported”
“For example, NNPC insists there is no more subsidy in the pricing of PMS but the difference between the AGO and PMS open market prices clearly shows some elements of subsidies or hidden cost recovery in the open market prices of PMS across the nation” he stated.
Raising hope on the coming onstream of Dangote refinery for PMS, Rabiu said Dangote Refinery would soon become a major supplier of petroleum products, adding that there must be regulatory intervention to ensure smooth entry of Dangote Refinery into the supply chain.
He said: “Immersion of Dangote Refinery in the downstream petroleum sector is a game-changer in the journey towards full deregulation.
“Government intervention to ensure a level-playing field in collaboration with all stakeholders is the most critical next step.
“All hands should therefore be on deck to ensure the attainment of a transparent, competitive, efficient and sustainable liberalized downstream petroleum sector in our country, Nigeria,” he stated.
Also, speaking at the event, Founder and Chief Consultant, B. Adedipe Associates Limited, Abiodun Adedipe said there is frustration in the value chain due to the unavailability of feedstock for local refineries, particularly Dangote Refinery which can meet Nigeria’s fuel needs.
He said, “The crude must be refined locally, the products should be available in sufficient quantity and we should provide a level playing ground for all players in the market.”
He emphasized that the government should ensure there is transparency in the system and allow competition to come into play while ensuring that there is no monopoly in importation and domestic production.
He urged all stakeholders in the value chain to take responsibility for their roles. Other stakeholders who spoke on the issues raised urged the government to hasten action on Port Harcourt Refinery to ensure a competitive refining environment so that Nigeria can have a thriving downstream
