Oil Marketers: Subsidy Has Diminished Nigerian Institutions’ Capacity to Deal with Energy Crisis

The Major Oil Marketers Association of Nigeria (MOMAN) has declared that Nigerian institutions now have diminished capacity to deal with the current local energy crisis driven by the breakdown in petrol supply and distribution system due to long years of subsidy payment.

MOMAN stated this in a statement Monday, during an online workshop for energy reporters, which centred on the need for deregulation of petrol pricing and the discontinuation of subsidy to encourage investments and competition in the downstream petroleum subsector.

This was just as the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) on Monday stated that the recent ultimatum given to petroleum marketers would not have any impact until the security agencies get to the root of the problem.

In the statement jointly signed by the Chairman of MOMAN, Mr. Olumide Adeosun and the Executive Secretary, Mr. Clement Isong, the oil marketers noted that a disruption in any part of the supply chain causes ripple effects and results in queues at filling stations.

The association added that Nigeria must begin the process of price deregulation to reduce the inefficient subsidy payment on petrol, arguing that if the country wished to implement a subsidy, it must be in areas targeted to help critical sectors of the economy like agriculture and transportation.

“Having subsidised PMS for so long, Nigerian institutions now have a diminished capacity to deal with the current local energy crisis. A disruption in any part of the supply chain causes ripple effects and results in queues at stations.

“As a country, we must begin the process of price deregulation to reduce this inefficient subsidy. If the country wishes to implement a subsidy, it must be in areas targeted to help those it should help such as in agriculture and transportation to reduce food price inflation and generate more jobs for Nigerians.

“In tandem, we must find a way to liberalise supply. We must bring transparency and competition into supply to ensure steadier, more efficient supply at optimum prices. Imported products must compete with locally refined products to find a meeting point between the need for local refining and competitively low but cost recovered prices for Nigerians for sustainability,” MOMAN stated.

It said the dialogue with the Nigerian people needed to begin to identify, negotiate and agree those areas and begin implementation to save the downstream industry, which it pointed out had been in, “degradation freefall due to a lack of investment to maintain, renew and grow assets and facilities such as refineries, pipelines, depots, trucks, and modern filling stations.”

“These lack of investments contribute in no small measure to fuel distribution inefficiencies and high costs. Neither the new refineries nor the refurbished refineries will survive with the refining margins at current pump prices,” it added.

The major oil marketers further explained that exploration, production, refining of crude oil and the distribution of refined products were all under an international business, with ebbs and flows.

It maintained that such business has specific models, guidelines, rules, and norms designed to protect and sustain consumers of such type of energy and populations impacted by its supply chain.

The association advocated that the government and the industry in Nigeria must demonstrably apply accepted health, safety, environmental protection, and quality norms to be seen to care for its local populations, warning that to cut corners would be irresponsible, unaccountable, and unsustainable.

“MOMAN continues to work with other key stakeholders to ensure that we ramp up supplies to our retail sites and return to normalcy as soon as possible. We envisage a rise in demand during the yuletide season and are prepared to work round the clock to keep our stations running. 

“As always, MOMAN advocates a full deregulation of the petroleum downstream sector in phases to cushion the effects of the impact of a sharp rise in PMS prices on the long-suffering, hardworking citizens of Nigeria,” the group noted.

Petrol Retailers: DSS Threat Won’t Make Products Supply Available Nationwide

Meanwhile, PETROAN has stated that the recent ultimatum given to petroleum marketers would not have any impact until the security agencies get to the root of the problem.

Speaking on Channels Television yesterday, PETROAN Chairman, System 2E, Eastern Zone, Sunny Nkpe, maintained that until the Department of State Service (DSS) curbs the excesses of a cartel operating among private depot owners hoarding the commodity, fuel scarcity would persist.

Describing the current supply situation as bad, he maintained that for the last six months, retailers have continued to get products from third parties, a development that has increased prices at the pumps, despite several representations to the Nigerian National Petroleum Company Limited (NNPC).

He stated that members of his association were currently buying between N220 to N250 from the so-called third parties, noting that if they were buying directly from the NNPC, products would be sold at N148.71 which is the controlled price.

Nkpe said in the past six months, there had not been a drop of allocation to the system by the NNPC, despite efforts to engage the authorities.

“Once you send a vessel to Port Harcourt depot, we will transfer to Aba, Enugu and others and this matter will be solved immediately,” he stated.

He added that the NNPC was selective in handing down ATP (Authority to Pay) to operators, a development that has hobbled supply of the product.

“The threat issued by the DSS won’t change anything. If they are serious they should start from the source. They should go to the depots, the PDOs, the private depot operators and find out what’s going on there because that’s where we are getting products from for now.

“Until the cabal in that area is handled and taken care of, we cannot get any reduction or even fairness in the distribution of petroleum products because the products land there and the off-takers fix their prices there and load it for our members the way they like,” he stated.

Also speaking, a former Trade Union Congress (TUC) President, Peter Esele,  who also appeared on the programme, said the DSS must have been privy to important information within the supply value chain to have issued the ultimatum.

Esele stated that nothing is currently moving in the industry because there’s a cartel holding the industry to ransom. In Port Harcourt for instance, he said products were being sold for above N220, with queues stretching kilometres.

He argued that the sector has since deregulated itself, maintaining that if government was still paying subsidy, there should be value for money because there’s corruption within the system.

“Everything is done by who knows who and it means that we are going to have a bleak or chaotic Christmas,” he stressed.

Esele urged the government to intervene in the matter, calling on the National Assembly to lead the investigation to unravel the cartel. He explained that if subsidy has been removed, the government should be bold enough to let Nigerians know the situation.

He insisted that things are bad in the industry, indicating that the DSS knows certain things that Nigerians do not know, which is making them put fire to the feet of the marketers.

Esele stated that there was racketeering within the system which has subjected Nigerians to hardship, rubbishing the claim that the scarcity was caused by issues in Apapa road infrastructure.

Describing the excuse as embarrassing, Esele explained that Apapa has been a mess for a long time, noting that it is pure dereliction of duty on the part of NNPC to blame the so-called bad roads, instead of being proactive in its activities.

He expressed the hope that DSS stepping into the fuel supply matter may make things better, arguing that it was abnormal to pay with dollars for services within the country. He also reiterated that there’s racketeering going on to the detriment of the people.

“In a functional market, people must realise that there are consequences for their actions,” he noted, stressing that policy inconsistency, indiscipline, nepotism and the absence of punishment for wrong actions remain Nigeria’s biggest problem.

He insisted that there’s enough product in the country, wondering why the product was not in circulation.

“DSS must tell Nigerians its findings within 48 hours, and whoever is behind this should be prosecuted because there are enough products in this country for everybody to get petrol,” he added.

However, in Abuja, THISDAY observed that after the DSS threat, the situation has improved to a large extent.

Although, many major marketers’ outlets were still shut, in the heart of the Federal Capital Territory (FCT), filling stations were selling for between N179 to N180 per litre.

Emmanuel Addeh in Abuja and Peter Uzoho 

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