By Gboyega Akinsanmi
The Nigerian Association Of Chambers Of Commerce, Industry, Mines And Agriculture (NACCIMA) has asked the federal government to investigate why the crude oil price crash did not affect the price of automotive gas oil (AGO).
NACCIMA, an umbrella organization for all affiliate chambers of commerce and industry in the country, added that the prices of diesel, have remained unaffected by the developments in the international oil market.
In a letter to the Director-General, Federal Competition and Consumer Protection Council (FCCPC), Mr Babatunde Irukera, the body asked the agency to investigate the stagnation in the pump price of diesel.
President Muhammadu Buhari, Vice President Yemi Osinbajo, Minister of State for Petroleum Resources, Chief Timipre Sylva; Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Mr. Mele Kyari and Executive Secretary, Petroleum Products Pricing Regulatory Agency (PPPRA), Abdulkadir Saidu were copied in the letter dated 29th April 2020.
The four-page letter was signed by the Director-General of NACCIMA, Mr. Ayoola Olukanni and its National President, Mrs Saratu Aliyu.
The letter explained how the outbreaks of COVID-19 plunged many of the world’s oil production countries into limbo, through closures and general financial uncertainty in China and other major oil and gas consumers.
The letter said the decline in production had precipitated a near-identical decline in oil prices. It said: “Figures from economic forecasters reveal that the price per barrel of oil has collapsed in the last four months, from a peak of $64.58 on January 5 to $20 on April 1.”
The letter said the drop has occasioned two periods of decline: a fall from $47.80 to $30.16 between March 5 and 9 as well as a fall from $33.33 to $20.23 between March 13 and 18.
It noted that Buhari had approved the reduction in the pump price of Petroleum Motor Spirit (PMS) from N145 to N125 and accordingly directed the NNPC to effect the change with the mandate to respond to any further oil market developments.
It said the price reduction was implemented in line with the price modulation template approved in 2015, which was designed to be cost reflective in line with market dynamics, saying the president reduced pump price of petrol due to the need to stabilise the nation economy and provide relief to ordinary Nigerians.
Despite the downward review of petrol pump price, NACCIMA’s letter lamented that the prices of the other imported petroleum products, particularly diesel, had not been unaffected by the developments in the international oil market.
The letter said NACCIMA’s investigation showed 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.”
In Nigeria, the letter read in part: “Diesel is a major cost component for 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 diesel indeed affects both the micro and macro economy of every nation and Nigeria’s Diesel-dependent economy is no exception.”
It thus urged the federal government “to investigate the downstream sector of the petroleum industry to clarify the correlation between the prevailing pump price of 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.
“The intervention of the FCCPC will be in harmony with the commission’s mandate to protect consumers in all spheres and same will 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.”
Acknowledging the letter, FCCPC ‘s director-general assured NACCIMA that the agency would analyse its request; investigate and make their findings and recommendations known.