OPS seeks FG’s intervention over diesel pump price

Members of the Organised Private Sector (OPS) have petitioned President Muhammadu Buhari, through the Director-General of the Federal Competition and Consumer Protection Council FCCPC, Babatunde Irukera, seeking an investigation into ‘the excessive price of automotive gas oil (ago)/diesel despite a decline in international crude oil prices.’

According to the operators, the misalignment of the pump price of diesel in the country despite current realities of low oil prices in the global market prompted the petition to be sent to the Federal Government to investigate the static movement in the pump price of the product.

The operators expressed worry because the productive sector’s consumption of diesel remains high for manufacturing and logistics.

The Nigerian Association of Chambers of Commerce, Industry, Mines And Agriculture (NACCIMA) representing the organised private sector, in the petition said: “The facts and circumstances upon which our Petition is based are outlined as follows: the sudden spread of Covid-19 has plunged many of the world’s oil-producing countries into limbo, through closures and general financial uncertainty in China and other major oil and gas consumers. This decline in production has precipitated a near-identical decline in oil prices.

“Figures from ‘Trading Economics’ (renowned economic forecasters) reveal that the price per barrel of oil has collapsed in the last four months, from a peak of $64.58 on 5 January to a low of $20 on 1 April. This drop has been hastened by two periods of significant declines: a fall from $47.80 to $30.16 between 5 and 9 March, and a fall from $33.33 to $20.23 between the 13 and 18 of March.

“As a result of the drop in crude oil prices and the consequent crash in the landing cost of imported petroleum products, President Muhammadu Buhari on 18th March 2020 approved the reduction in the pump price of Petroleum Motor Spirit (PMS)/Petrol from N145 to N125.00 (and accordingly directed the Nigerian National Petroleum Corporation (NNPC) to immediately effect the change with the mandate to respond appropriately to any further oil market developments.”

The price reduction, which the President assured was inspired by the need to stabilize the economy and provide relief to ordinary Nigerians, was implemented in line with the Price Modulation Template approved in 2015 which was designed to be cost-reflective in line with market dynamics.

NACCIMA, however, noted that despite the review of PMS/Petrol price, the prices of the other imported petroleum products, particularly AGO/Diesel, have remained unaffected by the developments in the international oil market.

“Our investigations reveal that AGO/Diesel has continued to retail at a pump price as high as N226.50 in several filling stations across the country, which is apparently at odds with the market dynamics that should determine pricing at the present time,” NACCIMA said.

According to the Chamber, in Nigeria, AGO/Diesel is a major cost component for the manufacturers and household consumers.

“It is used to power the generators, to bring alive the machinery, computer servers and mobile phone towers that run Nigeria’s economy, and serves as an intermediate input/cost element in production. The change in price invariably affects productivity, competitiveness and profitability. The pump price and availability of AGO/Diesel indeed affect both the micro and macro economy of every nation and Nigeria’s Diesel-dependent economy is no exception.

“In view of the foregoing, we hereby appeal for you to use your good office to urgently investigate the Downstream Sector of the Petroleum Industry in Nigeria to clarify the correlation between the prevailing pump price of AGO/Diesel and the landing cost, with a view to ruling out the possibility that the pricing may be unfavourably skewed against the end-user on the supply chain,” NACCIMA said.

The Chamber added that the intervention of the FCCPC DG will be in harmony with the Commission’s mandate to protect the Nigerian consumer in all spheres and same will equally bring relief to the manufacturers and indeed all consumers who, as attested to by government data, provide at least 14 gigawatts of power annually, which is a significant contribution to the gigawatts of power supplied by the DISCOS on the National electricity grid.

“We are trusting you, Sir, to treat our Petition with the utmost consideration and dispatch,” conclude the petition signed by NACCIMA Director-General Amb. Ayoola Olukanni on behalf of the Chamber’s National President, Hajiya Saratu Iya Aliyu.

In his acknowledgement of the petition, the Director-General of FCCPC, Irukera, assured the petitioners that the agency will analyse, proceed with the investigation and make their findings and recommendations known.