Petroleum marketers may have to forfeit about N16.5 billion in
possible subsidy claims due to oil price increases at the international
market due to hoarding of product, which they preferred to call
inventory stock.
The Petroleum Products Pricing Regulatory Agency,
PPPRA, in a document obtained at the weekend, titled: “New Framework
for Petroleum Products Supply, Distribution and Pricing – May 2016,” put
total subsidy accrued from April till date at N16.5 billion.
But
the losses are more than made up by the high inventory level built at
the time of the sudden pump price increases in premium motor spirit,
PMS, also called petrol.
At the new pump price of N145/L,
marketers are more than willing to forfeit any subsidy claims prior to
the price increases as they were already reaping about N58.50/L against
the previous pump price of N86.50/L. As a result, less N13/L, the
marketers still have a handsome excess profit of N45.50/L
It was
gathered that subsidy levels as at May 6, had reached the N13/litre mark
before the Federal Government made the sudden announcement of N145/L
for petrol on May 11. This is to avoid further accumulation since there
was no provision for subsidy in the 2016 national budget.
Neither
the Department of Petroleum Resources, DPR, nor the Petroleum Products
Pricing Regulatory Agency, PPPRA, the industry regulators has offered
any figure on the inventory level at the time of announcement of the
pump price change. But it was learnt that this was already running into
billions of Naira, as daily accumulation is put at N520 million i.e. 40
million litres x N13.
Product hoarding helped to build inventory
levels, especially as marketers were expecting early announcement of the
pump price increase, which came five days later, a development that led
to the resurgence of long queues at filling stations nationwide.
Some
marketers, who spoke in confidence, said: “PPPRA was about to come and
take stock at the tanks and depots, but they were told to forget it as
the announcement was expected to be made that evening. So nobody
actually came to take the inventory.”
Against this backdrop, the
marketers admitted that “No marketer has the moral right to go claim
subsidy for 2016 no matter how small, because they have gained on
inventory. The
Besides, he noted, the minister’s announcement was in breach as
according to him, “There was not supposed to be any announcement; the
trigger we were all expecting was for PPPRA to change their template.
The change in template would have triggered all of us into action and if
anybody had asked, we would have referred them to the PPPRA template.
Somehow, Kachikwu (Minister of State for Petroleum), decided it was best
for him to talk.”
Already the astronomical profits, which the
marketers are reaping at the expence of Nigerians, now bearing the
burden of almost 80 percent price increases without notice or attendant
palliatives have already miffed the Trade Union Congress, TUC.
The
TUC has called for status quo ante or risk nationwide strike, even as
other industry unions, the Petroleum and Natural Gas Senior Staff
Association of Nigerian, PENGASSAN, and its junior counterpart, National
Union of Petroleum and Natural Gas Workers, NUPENG are seen to have let
the masses down by supporting the price increases.
TUC argued
that it was preferable that government added the N13/L subsidy
accruable, which would have brought pump prices to about N99.50/L than
the additional N58/L inflicted on Nigerians.
Apart from the 80
percent pump price increases, the fact that marketers were told to
source for their foreign exchange, forex/FX from secondary sources is
another cause for worry, as this has further devalued the Naira.
As
at Friday, the Naira exchanged at N360 to $1, against N289 at the time
of the price increases at the parallel market. To this extent, pump
price should be actually higher than N145/L, which the PPPRA even
alluded to on its website at over N243/L.
This means that if oil
prices rise higher than current levels to possibly above the $50/barrel
mark as being expected, then Nigerians would be subjected to further
fuel pump price hikes.
The inability of the Federal Government,
through the Nigerian National Petroleum Corporation, NNPC, to acquire
forex at official rate of N197/$1, compounded the petrol scarcity
situation in the country.
However, another marketer argued that
this may not necessarily be so, saying: “If oil price rises
significantly, then we will go back to government to talk. Significantly
levels would be above N5/Litre differential, but that will be an
internal discussion because we have accepted that this system has come
to stay, and we are going to work with it and make sacrifices here and
there.”
reason is because on the day of the announcement was
made, everybody had product (petrol) in their tanks, which means that
there was some inventory.”
Speaking in defence of the hoarding of
product, one of the marketers, who preferred anonymity said: “It was not
intentional at all. What happened was that we were loading out to
petrol stations and there was this confusion, because the announcement
should have been made last week Saturday (May 6), so some marketers were
waiting for the minister (Petroleum Resources) to make the
announcement.
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