Despite nationwide call for the Federal government to stop paying subsidy to petroleum marketers, downstream operators in Nigeria’s oil and gas sector have said that Nigeria is not ripe yet for deregulation of petroleum price.
The operators told Shipping Position Daily in separate interviews last week that deregulating the petroleum industry would allow for monopoly and cabals hijacking the economy of the nation.
This is as major oil marketers have vowed not to resume petroleum products importation because the regulatory environment is not profit-driven.
A petroleum marketer at Fatgbems Tank Farm at Kirikiri Lagos, Comrade Sunday Ehinome argued that subsidy is what enables government to get the product cheaper to Nigerians across all states of the federation at a uniform price.
He argued that what the federal government needs to do is to create refineries and allow more private investors into refineries construction before considering subsidy removal.
Comrade Ehinome disclosed that, “subsidy is all about making the product cheaper for Nigerians so that the approximate amount of N145 per litre continues everywhere so that we can have power to attack anybody that sells above pump price”
“But when you say you want to remove it, you must make the price of fuel to come down and accessible, if the government can ensure that product is circulated to the nooks and crannies of Nigeria, then we don’t need subsidy, but right now, our refineries are not working”
Also speaking with Shipping Position Daily, Comrade Onward Onwundiwe at Techno Oil depot noted that the reason many marketers storm Lagos and prefer to load product in Apapa is because of the subsidy government gives them on the transportation of the cargo.
He argued that Nigeria was not matured enough to operate its petroleum sector with subsidy because it subsidy removal would leave the masses and Nigeria economy at the mercy of cabals in the oil business.
“Many marketers are coming from the East to buy products here, why? It is because of subsidy, when they finish every transaction, they keep the waybill and at the end of the way, government will pay in bulk all the money. If there is no gain on the product, then there is no need coming from east to buy product in Lagos, this is why subsidy is good, it allows us to get the price at a uniform rate”
“Nigeria is not matured enough to operate without subsidy, if we remove subsidy, it would allow monopoly among petroleum marketers and this is where the economy of Nigeria would be destroyed”
“Government should allow private refineries to be set up, even in the desert and allow people take their crude to be refined there”, he said.
Meanwhile, marketers under the aegis of Major Oil Marketers Association of Nigeria (MOMAN) last week said that the understanding expressed by the Petroleum Products Pricing Regulatory Agency (PPPRA) of possible downward review of pump price of petrol following decline in crude oil price in the international market may not necessarily prompt price adjustment.
The new chairman of MOMAN, Mr. Adetunji Oyebanji, explained that price adjustment is a function of several factors of which crude pricing is just one.
Oyebanji said the exchange rate is a major determining factor and that except the present price template is reviewed taking into account all the changing market variables, pump price may likely not change in either direction.
He noted that since the association is operating under a regulated regime and that it can only follow guidelines issued by the industry regulator.
The chairman, while reacting to a question on whether price adjustment of petrol is convincing and conceivable said, available infrastructure may not support the idea, because beside high exchange rate, other associated costs like, bridging cost which is done by road takes toll on transportation of products.
He said marketers are currently operating at huge losses and many operators have shut down operations because the sector is highly regulated and not investment friendly.
“We are currently tied to a margin which is fixed and we cannot adjust. If my input cost is going up and exchange rate is going up, it affects our business, pump price has to do with exchange rate, so we have to understand the economics,” he said.
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