Market forces dictate fuel prices, queues’ lengths at filing stations

NOTWITHSTANDING the threat by the Federal Government to sanction petroleum dealers that indiscriminately hike pump price above official rate, some marketers have continued to sell fuel at about N120 and above per litre.

Many observers believe, that the trend of marketers breaking free from government regulated price would unofficially herald a partial deregulation of the petroleum downstream sector.

The new unofficial deregulated regime is being foisted on the nation by market forces, being played up by the lingering fuel-supply crisis.

Some fuel importers, who independently sourced funds to import products, explained that they had to resort to selling at their own prices in order to recoup their capital and make reasonable profits.

The current scenario was obviously unformed by fears on the part of the marketers that the outstanding payment obligation of N200 billon subsidy might not be honoured by the new administration.

Already, the outstanding amount has attracted some controversies within and outside the government.

The immediate past Minister of Finance, Ngozi Okonjo-Iweala, for instance, contested the figure, leading to the establishment of a panel to verify the claims of the marketers.

With the panel’s report yet to be submitted, apprehension had risen among the marketers, leading to the current discretionary fixing of fuel prices at their respective depots and stations.

According to the Petroleum Product Pricing and Regulatory Agency (PPPRA) last weekend, the expected open market price was N133.58 per litre; landing cost, N118.09; ex-depot price, N77.66; regulated price, N87 while subsidy per litre of fuel stands at N46.58 per litre.

Despite the fact that the depot price of fuel remained N77.66 per litre, depot owners prefer to sell between N100 and N120 per litre.

The deregulated price saga had earlier begun in the South-East and South-South geo-political zones, even before the crisis swept through the South West and Lagos, the economic nerve centre of the country.

The supply crisis was being tampered in the northern part of the country with fuel supplies from neighbouring Niger Republic.

By yesterday, The Guardian discovered that only some major filling stations such as Mobil, Total, NNPC outlets in Lagos metropolis, South East, South South and South West states sold petrol at the official pump price of N87 per litre whenever they have to sell.

For example, Sabola filling station owned by NIPCO Plc sold at N150 per litre. Rain Oil along Okota road also sold at N150 per litre while Petroleum Managers sold at N120 per litre.

An attendant at Petroleum Mangers along Oshodi- Apapa Expressway told The Guardian that the manager of the filling station instructed them to sell at that price because the N87 per litre price was not realistic.

He said if they sold at below N120, they would not be able to break even and make profit.

At some Mobil, Total, Oando and Forte Oil filling stations, the price of petrol remained N87 per litre but hardly have to dispense.

The Guardian investigations revealed that the government’s foreign exchange policy was a major factor that has shot up the cost of importation, which in turn led to high pump price, even after the temporary resolution of the subsidy payment issue.

Indeed, The Guardian learnt that the depot operators are now selling Premium Motor Spirit (PMS) at between N87 and 120 per litre, against the official ex-depot price of N77.66 per litre.

The filling stations have therefore transferred the cost burden on consumers, who are compelled to buy at between N100 and N130 per litre amid light queues.

The Central Bank of Nigeria (CBN) had recently banned commercial banks from re-selling CBN dollars to other banks, an attempt to end speculation on the naira.

The apex bank, in scrapping its window of direct sale of foreign exchange to end users, said all foreign exchange needs are to be sourced from the inter-bank market whose rate ranges between N197 and N198 to a dollar.

Some of the marketers, particularly the independent ones, have therefore come up with alternative means of securing foreign exchange in order to continue the importation business.

But such foreign exchange is being secured at higher rates, which automatically shoots up cost of importing fuel.

A marketer told The Guardian that his company has imported products, but would not sell at the official rate due to the rise in cost of importation, saying that they are unsure of what would happen at NNPC which promised them foreign exchange on credit reneged.

He said following this commitment, the major marketers have placed orders of products, which are expected to start berthing before the end of this week.

The Department of Petroleum Resources (DPR), however, warned that any station that sells above the official price shall face strict sanctions.

Head, Public Affairs, Department of Petroleum Resources, Dorothy Bassey said: “While the Department of Petroleum Resources (DPR) is making every effort to ensure that fuel is available and reaches every part of the nation, it is hereby emphasised that the Federal Government has not increased the price of fuel.

“The price remains N87.00 per litre. Any station caught selling above the stipulated price, will have its licence revoked.

“No station should sell in jerry cans as there is enough fuel and for safety reasons. Any station caught dispensing into jerry cans will be sealed,” she stated.

The Managing Director of Mobil Oil Plc, Adetunji A. Oyebanji, told The Guardian that it will be difficult for the marketers to import product without a clear assurance of payment.