Fuel Crisis: Marketers Suggest ‘Crude Swap’ In Place Of Subsidy

Fuel Crisis

Fuel Crisis

AS part of efforts aimed at putting a halt to the lingering fuel crisis, Petroleum marketers have suggested Crude swap between them and the Federal Government.

With the crude swap, government is expected to allocate certain barrels of crude oil to the markers, which the latter will in-turn take to refineries abroad, process and return same quantity as finished product.

The marketers had stopped importation of petroleum products since March when controversy over subsidy debt started, leaving the business of fuel importation to the Nigerian National Petroleum Corporation (NNPC), which now importS only 50 per cent of required products into the country.

The marketers, who are working on the ‘‘swap” arrangement have already sold the idea to the Federal Government for adoption, and assumed that it could bring to a permanent end the subsidy regime and the current fuel crisis in the immediate future.

According to them, the arrangement was necessary “as the government can no longer sustain subsidy of the products.

The long-term solution, according to the marketers required the encouragement of local refining of the crude so to put a permanent end to importation of the commodity, and to make it affordable to all Nigerians.

National Chairman of Independent Petroleum Marketers Association of Nigeria (IPMAN), Chief Okoronkwo Chinedu, gave the hint during the week that the marketers were working on ‘‘swap” arrangement with the government as a short term solution.

The IPMAN chairman said his association is no longer interested in subsidy, but its alternative that could bring normalcy into the Nigerian petroleum market.

He also suggested local refining of crude as the long-term solution to the current fuel crisis, adding that his association had already secured 1,350 hectares of land in Itobe, Kogi State as a location for its own refinery for which it had applied for license from Petroleum Pipeline Products Regulatory Agency (PPPRA).

‘‘The government can no longer sustain the subsidy regime. So the alternative in the short run, is the ‘‘swap arrangement.” Give us the crude, we will export and bring back the refined products in the same quantity of crude given to us. The price of the crude is no longer the way it used to be. We can bring in fuel without subsidy. We have foreign partners who can wet this country. If they give us crude, we can take out and bring back refined products without subsidy. They don’t have money to fund subsidy policy because of the dwindling revenue”.

The Major Maketers Association of Nigeria (MOMAN) also confirmed that its members have not been importing subsidy based petroleum product.

The Executive Secretary, Olawore Obafemi, said they have only been helping NNPC in the distribution of the products, thus confirming claims that only 50 per cent of local demand of the product is currently being supplied.

‘‘We are not importing petroleum products, especially those that are subsidy based. We are distributing what NNPC gives. As they give, we send to the market”, Olawore said, adding that the government was trying to get to the marketers in the attempt to resolve ripples emanating from subsidy regime”.

Like his IPMAN counterpart, Olawore said it was obvious that government could no longer sustain the subsidy regime, hence the support for total deregulation of the entire oil and gas sector.

‘‘We are 150 per cent in support of deregulation of the oil sector, because the government can no longer sustain subsidy. If, for instance, we are consuming 40 million litres of fuel daily, it means government is going to pay N1.6 billion daily on subsidy. Why should government sustain that? Where is the money? They should deregulate and put in place a very strong regulatory agency for operational matters, not on price. The agency should only monitor the market as we are doing in Telecoms sector and to call players to order. Nigeria, the government and Nigerians are not enjoying the subsidy regime. The only people that are enjoying it are the foreigners, the refineries abroad,” he lamented.

He gave reasons why deregulation is necessary. He said it would encourage the emergence of local refineries that will eliminate all import costs, which , according to him, include $30,000 Temporary Import Permit paid by marketers to the Nigeria Customs Service, three per cent freight charges payable to the Nigeria Maritime Administration and Safety Agency (NIMASA) and charges by the Nigerian Ports Authority (NPA). All these charges, he said, were being collected by the agencies in dollars.

Although the tension created as a result of fuel scarcity last month is yet to subside completely, NNPC said it has enough products to sustain the market as it is today, even when many filling stations are yet to receive supplies.

The corporation said it was aware that the market ‘‘is not fully wet,” but it might not be able to supply more than half of the market demand as a result of government regulation.

Authoritative source at petroleum Product Marketing Company, (PPMC), a subsidiary of NNPC, confirmed that the corporation is now the only organization importing fuel, as the marketers had discontinued importation to protest non-payment of subsidy debt owed them by the government.

‘‘We are only importing 50 per cent of our local consumption. Before now, NNPC was importing 50 per cent of local need, while the remaining 50 per cent was by marketers. But they have stopped importation and NNPC cannot go beyond its 50 per cent. So the fuel you have now is from NNPC, which is sustaining the country at the moment.

On pricing, consumers have been contending with increased price of the products that used to be sold at N87 per litre. The price per litre now varies between N87 and N130 per litre.

But the Lagos State Chapter, of Independent Petroleum Marketers Association of Nigeria (IPMAN), absolved its members of any blame over the current hike . Rather, it put the blame on private petroleum distributors who sell fuel at a cost of N105 or N110 per litre so that the economy of the nation would not be grounded.

  • TAJ

    Another monumental fraud in the making!!! Why can’t the government build more refineries and make the existing refineries work at full capacity?! These kind of deals will end up lining the pocket of a few individuals such as Otedola and his fellow petroleum sector cabals!

  • Peter O Peters

    Let federal Government support every oil producing state that collects 13% derivative build 2 new refineries….especially those along the shoreline.

  • emmanuel kalu

    first of all. why in GOD’S name would any nigeria MDA be demanding payment in dollars. when did dollars become our local currency. that is the first thing that should happen. NO more payment to MDA in dollars. secondly, there should be an executive order allowing NNPC to fully import what hte country needs in fuel. This fuel should then be sold at cost with a 5-10% profit margin. finally, this is a bad ideal to do any swap of crude oil for fuel. out of a barrell of oil, you can get ten product, yet the hostage taking cabals want to send us only one or two products. the answert to our fuel issue is complete and total deregulation of the sector. and this should happen immediately, while we build up the regulatory body, of which we have one already. no more scheme that would end up being used to loot nigeria.