This is even as oil marketers said they had not been able to import the product due to the high foreign exchange rate of $1,500/$, which has increased the landing cost of the product to more than N1,100 per litre.
Meanwhile, the Nigeria Employers Consultative Association, said yesterday that the economy continues to struggle due to fluctuations in the foreign exchange market, continued low crude oil production, and a high monetary policy rate that constrained business activity.
Checks by Vanguard indicated that players in the value chain have adopted measures to maximise the allocation of available limited supply.
Vanguard gathered that under the current arrangement, major marketers, their dealers, and depot owners get the product at about N560 per litre and sell it to independent marketers for between N670 and N680 per litre.
The independent marketers that incur the cost of transportation to many parts of the nation, including the outskirts, sell the product to off-takersat between N700 and N900 per litre, depending on location.
There were long queues at the few filling stations that opened to customers, yesterday, while several without the product shut their gates.
Debt to petrol suppliers affects sustainability — NNPC
Reacting to the development yesterday in a statement, the Chief Corporate Communications Officer, NNPC Ltd, Olufemi Soneye, stated: “NNPC Ltd has acknowledged recent reports in national newspapers regarding the company’s significant debt to petrol suppliers.
‘’This financial strain has placed considerable pressure on the company and poses a threat to the sustainability of fuel supply.
‘’We are actively collaborating with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products nationwide.”
NNPC admits $6bn debt to petrol suppliers
The Nigerian National Petroleum Company Limited, NNPC Limited, also yesterday admitted that it was owing its petrol suppliers a substantial amount.
The company’s Chief Communications Officer, Mr Olufemi Soneye, in a statement, said the debt has posed a significant financial strain on NNPC operations.
Subsidy to hit N5.4trn in Dec
NNPC’s financial forecast has it that the total petrol subsidy bill from August 2023 to December 2024 will reach N5.4 trillion.
According to NNPC, the removal of the petrol subsidy in June 2023 initially led to monthly savings of N400 billion for the federation, enabling the company to remit N2.032 trillion in taxes and royalties by January 2024.
However, the NNPC’s costs importation turned negative in August 2023 and rose to N5.41trn by April 2024 because of the devaluation of the naira.
We have no access to bulk petrol supply — IPMAN
Similarly, the Independent Petroleum Marketers Association of Nigeria, IPMAN, cried out yesterday over its members’ exclusion from direct supply of petrol from NNPC Limited.
The independent marketers said in the absence of direct bulk supply from NNPC, its members had had to source products from private depot owners at exorbitant rates.
IPMAN Public Relations Officer, Chief Chinedu Ukadike, who spoke exclusively to Vanguard, said until independent marketers who operate the majority of petrol stations across the country were able to get direct supply from NNPC, it would be difficult to end the lingering fuel queues that had lasted over two months.
He explained that while petrol products had started arriving at ports in Warri, Port Harcourt and Lagos, IPMAN members struggled to access the product.
“For some weeks now, products have not been supplied to IPMAN members. We have been buying from other tank farm owners and major marketers. But recently, products have started coming in. We are aware that they are receiving products now in Warri, Lagos and Port Harcourt, and marketers’ barge will soon come out.
‘’If IPMAN members can holistically be allocated the product, all these issues of profiteering and bottlenecks will be resolved. This is our constraints and there is nothing we can do than go to other tank farms to see if we can get product from them.
“So, we don’t have access to our own petroleum products and allocations have not been given to us,” he declared.
Ukadike assured that if the bottlenecks were resolved, there would be products at affordable rates.
Speaking on why the cost of obtaining the product from the private depots was high, he said: “The price varies, depending on how scarce the product is.
‘’When the product is scarce, the tank farm owners normally sell to their own filling stations. So, what we now do is to go to their filling stations where there will be a surge of trucks waiting to be discharged to see how we can be able to lobby and pay extra money to get petroleum products.
‘’Likewise for NNPC. Once you go to their filling stations, you will see a surge of trucks, over 6-7 trucks parked by the side waiting to be discharged. So, we are no longer independent marketers; we are now dependent marketers. Independent marketers are not really captured in terms of the distribution of the chain”.
He explained that before now, it costs about N500,000 to bring a truck from the coastal depots to Abuja but noted that cost has escalated to about N3.5 million due to the high cost of diesel, truck maintenance and bad roads.
Oil marketers had recently advocated a reduction in the pump price of diesel to N700 per litre to help improve the distribution of petrol across the country.
The President of the Natural Oil and Gas Suppliers Association of Nigeria, NOGASA, Mr. Benneth Korie Doi, stated in Abuja that the high cost of diesel used by trucks was a significant barrier to the efficient distribution of petrol nationwide.
Mr. Doi had said: “Regarding the prices of Automated Gas Oil, AGO, with Dangote’s refinery production and crude oil transactions in naira, we expect a reduction in AGO prices. NNPC should leverage its shares in Dangote’s refinery to drive down these costs, which will, in turn, lower transportation expenses and reduce market prices.”
He emphasized the need for the government to create a competitive downstream sector in the petroleum industry, arguing that monopolies were detrimental.
“We must foster a competitive environment to ensure the healthy circulation of petroleum products. I commend Aliko Dangote for his monumental contribution to our industry through the establishment of the largest refinery in Nigeria.
“This development promises substantial benefits, including enhanced supply, increased competition, and a boost to our national economy and currency.
“To ensure balanced distribution, I urge that Dangote’s refined products be made available to a broader range of stakeholders, including NNPC Trading, NNPC Retail, DAPPMAN, MOMAN, IPMAN, PETROAN, and NOGASA. This inclusivity will facilitate sustainable and widespread distribution across the country,” he said.
Dangote Refinery to end shortage — PETROAN
Also reacting to the development in an interview with Vanguard, yesterday, the Chairman of the Lagos chapter of the Petroleum Products Retail Outlets Owners Association of Nigeria, PETROAN, Mr. Joseph Ehimen, said: “The sector was deregulated to bring about positive changes. But the changes have been wiped out because of this fuel shortage.
‘’Nigerians are suffering because of limited supply. As operators, we are also facing many problems, including the high cost of moving the product from the depots to the filling stations, maintenance cost and dues.
“We are aware of efforts by NNPC Ltd to maintain the refineries. We need to get them to work as quickly as possible. If all required arrangements are made, Dangote Refinery should be able to assist in ending the fuel shortage because of its huge 650,000 barrels per day capacity.”
Why Nigeria’s economy continues to struggle—NECA
Meanwhile. the Nigeria Employers Consultative Association, NECA, has given reasons the nation’s economy is still struggling, despite its resilience in the second quarter of 2024.
‘’Nigeria’s economy demonstrated resilience in the second quarter of 2024, with a Gross Domestic Product, GDP, growth of 3.19 per cent year-on-year in real terms.
“This growth rate surpasses the 2.51 per cent recorded in the same quarter of 2023 and is aiso higher than the 2.98 per cent growth seen in the first quarter of 2024.
These figures reflect a positive economic trajectory, driven primarily by strong performances in the services and industry séctors,’’ the National Bureau of Statistics, NBS, had said in its latest report.
However, analysing the report, NECA’s Director-General, Mr Wale-Smatt Oyerinde, said in Lagos: “The services sector emerged as the leading force behind this growth, recording a robust 3.79 per cent increase and contributing 58.76 per cent to the aggregate GDP.
‘’This sector’s expansion underscores its critical role in Nigeria’s economic fabric, highlighting the importance of continued investment in service-oriented industries such as telecommunications, finance and real estate.
“The industry sector also showed significant improvement, growing by 3.53 per cent in Q2 2024, a notable recovery from the -1.94 per cent contraction in the same quarter of the previous year.
‘’This sector’s turnaround signals a potential revival in manufacturing and construction activities, areas vital for job creation and economic stability. Agriculture, while essential, grew by a modest 1.41 per cent, slightly down from the 1.50 per cent growth recorded in Q2 2023.
“This indicates a need for strategic interventions to enhance agricultural productivity, especially considering the sector’s crucial role in food security and rural development.
Navigating economic headwinds
“Despite these positive developments, Nigeria’s economic outlook is tempered by both global and domestic challenges. The International Monetary Fund, IMF, recently revised Nigeria’s growth projection downward by 0.2 percentage points, from 3.3 per cent to 3.1 per cent .
“This revision reflects the broader global slowdown, driven by tighter monetary policies from central banks and reduced growth in key economies like China.
“Domestically, Nigeria faces its own set of challenges, including fluctuations in the foreign exchange market, continued low crude oil production, and a high monetary policy rate that constrains business activity. These factors collectively dampen the full potential of the economy, making it imperative for strategic policy interventions.
Sustainable growth
“To sustain and build upon the recent economic gains, Nigeria must focus on comprehensive sectoral reforms that enhance the business environment and attract both domestic and foreign investments.
‘’Key areas for government action include agricultural productivity. Supporting farmers with modern technology and access to finance is crucial to increasing agricultural output and ensuring food security. Investments in this sector will also help to stabilize rural economies and reduce poverty.
“Revitalizing the industrial sector: Infrastructure improvements, particularly in energy and transportation, are essential for the industrial sector’s growth. By creating a more conducive environment for manufacturing and construction, Nigeria can drive economic diversification and reduce reliance on oil revenues.
“Investing in Human Capital: Education and skill development are critical for empowering the workforce and fostering innovation. By focusing on upskilling workers, Nigeria can ensure that its labour force is well-equipped to meet the demands of a rapidly evolving economy, particularly in the services and technology sectors.
“Strengthening Macroeconomic Stability: Addressing the volatility in the foreign exchange market and ensuring a more stable macroeconomic environment will help to boost investor confidence and support sustainable economic growth.”
Pathway to Economic Resilience
On economic resilience, Mr Adewale Oyerinde insisted that “while Nigeria’s economy is not yet at a stage of unqualified success, the recent GDP growth indicates a positive momentum that, if well-managed, can lead to sustained economic improvement.
‘’Government should focus on implementing targeted reforms to enhance productivity across key sectors, attract investment, and ultimately create a more resilient and diversified economy.
“By doing so, Nigeria can better navigate the global and domestic challenges it faces and pave the way for long-term economic prosperity.”
Ultimatum for traders to crash prices
On the recent one month ultimatum given to the traders by the Federal Competition and Consumer Protection Commission, FCCPC, to crash prices of essential commodities, the NECA Director-General cautioned against the use of enforcement to moderate prices in the economy.
According to him, this will be tantamount to price control, which may lead to hoarding of commodities and further distortion of the economy.
He urged the government to, among others, embrace measures that would encourage foreign exchange, FX, conservation and adoption of a more beneficial exchange rate regime.
He said: “The continuous escalation in commodity prices and service charges in the economy is a product of the abrasive macroeconomic fundamentals. The magnitude of the three key economic prices (rates), (exchange rate, inflation rate and interest rate), coupled with contradictions in the regulatory environment all conspired to influence current price rates.
“With a constantly fluctuating exchange rate and galloping lending rate, high energy costs, multiplicity of taxes, levies and fees and an unfriendly regulatory environment, it will be practically impossible to have a stable price regime.
“The use of enforcement to moderate prices in the economy would be tantamount to price control, which may lead to hoarding of commodities and further distortion of the economy.
‘’Any price control measure would also contradict the market economy that the government is projecting and send wrong signal to prospective foreign and domestic investors.
“The Federal Competition and Consumer Protection Commission, FCCPC, may never be able to determine what the right commodity prices and service charges will be, given the complex costs situation businesses face – FX cost, Custom FX cost, cost of borrowing, energy cost, internal transportation logistics cost, taxes, regulatory cost, increase wages and salaries, and many more.
“The increasing commodity prices and service charges could be better moderated by addressing the macroeconomic fundamentals, such as inflation, exchange rates and fiscal policies, which feed into the high cost of doing business in the economy.
“The federal government should embrace measures that would encourage FX conservation, adopt a more beneficial rate exchange regime, embark on inward-looking monetary management to moderate cost of borrowing, invest significantly in infrastructure development, encourage domestic refining to lower cost of transportation, logistics and pursue general improvement in the business operating environment.”
Subsidy bill hitting N6.8trn — NNPC
NNPC’s financial forecast has it that the total petrol subsidy bill from August 2023 to December 2024 will reach N6.884 trillion.
According to NNPC, the removal of the petrol subsidy in June 2023 initially led to monthly savings of N400 billion for the federation, enabling the company to remit N2.032 trillion in taxes and royalties by January 2024.
However, the NNPC’s costs of importation turned negative in August 2023 and rose to N833.68 billion by April 2024 because of the devaluation of the naira.
Source | Vanguard
