Fuel Price Increase Looms As Landing Cost Increases

Representative of the Rotary International President, Mr. Keith Roffey (left) presenting the Rotary Award of the Year to the Minister of State for Petroleum, Dr. Ibe Kachukwu at the 9th District Conference of the Rotary District 9125

• NNPC groans over high price of subsidising imports

There are indications that Nigerians may start paying higher for fuel any moment from now, this is because there has been a rise in the landing cost of imported fuel and the amount spent by the Nigerian National Petroleum Corporation (NNPC) to import the fuel into Nigeria has increased.

Findings by Shipping Position Daily last week revealed that the landing cost of fuel had increased in the second quarter of the year owing to the increase in crude oil price to $80 per barrel compared to the $50 per barrel in the first quarter.

The landing cost as at last December 22, 2018 was N171.4 per litre when the price of crude was $64 per barrel. Now at over $80 per barrel, the landing cost would be well above N180.

However, findings by Shipping Position Daily correspondent also showed that more than 22 depots were stocked with petrol imported by the NNPC in Lagos at the weekend, compared to the usual 10 - 14 depots at the best of times.

The prices range from N134 - N135 per litre in these depots, which belong to both major marketers and independent marketers.

The depots include: AA Rano, Ascon Petroleum, Bovas, Chi-Pet, Fatgbems, First Royal, Folawiyo, Gulf Treasure, Integrated Oil and Gas, MRS Oil and Gas Limited, Obat Oil, Africa Tanker, Sahara Energy, Swift Oil, Techno Oil, and Stallonire.

Others are: NIPCO, Oando, Mobil Oil, Forte Oil, Conoil, and MRS Oil and Gas Plc.

It was also learnt that NNPC stocked petrol in Atlas Cove Depot in Lagos, which receives imported product from very large vessels and pump to Ejigbo Satellite Depot, Mosimi Depot in Ogun State, Ibadan Depot, Ore Depot in Ondo State and Illorin Depot, collectively called System 2B network, which accounts for 60 per cent of petrol supply in the country.

Meanwhile, the NNPC has warned that the country should expect increase in the landing cost of fuel. According to the Public Affairs Group General Manager of NNPC, Ndu Ughamadu, the government, has huge under-recovery to battle in view of the rise in the landing cost.

Ughamadu said the under-recovery rate is the gap between the cost of buying fuel abroad and the price of selling it at home. He said the government has been subsidizing the cost of importing fuel, adding that the corporation was doing to avert fuel scarcity its attendant strains on the economy.

He said the level of fuel imports by NNPC had grown, adding that the country consumes a little over 50million litres of fuel.

He has however assured that there won’t be increase in fuel price, despite the rise in the landing cost of imported fuel. He said the landing cost goes up when the international price increases, adding that it is a normal occurrence in the global crude oil market.

He said the government has fixed N145 as official pump price for premium motor spirit (PMS) or petrol, adding that marketers were free to sell it at either the regulated price or below it, depending on market forces.

Ughamadu denied any increase. He said: “NNPC is yet to give Nigerians the new landing cost of fuel as it is not within its responsibilities to do so. The responsibility of letting the country know what the new landing cost of fuel lies with the Petroleum Products Pricing Regulatory Agency (PPPRA) and being a Federal Government owned- parastatal like NNPC, NNPC cannot exercise control over what the PPPRA does or is expected to do in the Nigeria’s oil and gas industry.

“The global oil industry moves or operates in line with the market forces. Once there is rise in the global price of crude oil, related activities move in similar direction. That is why the increase in the price of crude and its attendant rise in the price of brining the product to Nigeria do not bother us (Nigeria) much.  Traditionally, refiners of crude abroad ten to increase the cost of processing crude oil into finished products like Premium Motor Spirit, Kerosene and Diesel, when the price of crude rises at the global market.”