Dike Onwuamaeze in Lagos, Chuks Okocha and Emmanuel Addeh in Abuja and Ibrahim Shuaibu in Kano
Anger and condemnation greeted the directives of the Pipeline and Product Marketing Company (PPMC) advising petroleum marketers to sell Premium Motor Spirit, also known as petrol, within the range of N168 per litre to N170 per litre with effect from yesterday.
The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), The Lagos Chamber of Commerce and Industry (LCCI), the Nigeria Employers’ Consultative Association (NECA) and the opposition Peoples Democratic Party (PDP), all expressed anger and disappointment with the rise in the price.
The LCCI and NECA, in separate interviews with THISDAY urged the federal government to accelerate the implementation of pro-poor policies that would cushion the impact of deregulation of the prices of petroleum products on Nigerian masses.
The Director General of LCCI, Dr. Muda Yusuf, told THISDAY that there is an urgent need for the government to “cushion the effects of petrol price increases by scaling up investment in mass transit systems. Moreover, the power sector recovery programme should also be accelerated to reduce the dependence of Micro, Small and Medium Enterprises (MSMEs) on petrol powered electricity generators.”
Yusuf said these two areas of intervention would reduce the adverse impact of petrol price volatility on small businesses and the welfare of the citizens.
He suggested that the way out of this petrol price quagmire “is to accelerate the process of domestic refining of petroleum products. A deregulated pricing regime is typically volatile, oscillating with global oil price. The reality is that a reversal of the deregulation policy is not an option. The government does not have the fiscal capacity to sustain a subsidy regime.”
Speaking in the same vein, the Director General of NECA, Mr. Timothy Olawale, implored the “government to, as a matter of urgency, fast-track the implementation of all pro-poor policies,” which would not only ameliorate the petrol price increase but also “cushion the effects of COVID-19 and EndSARS protest on businesses and the generality of Nigerian lives.”
Olawale also pointed out that the hike in the ex-depot price of Petrol by N7.50 per litre to N155.17 from N147.67 per litre has generated concerns from Nigerians because there was no corresponding increase in the price of crude oil in the international market to justify the increase.
He said: “This became worrisome to many Nigerians as there was no major increase in the price of crude oil at the global market, rather a decline, which ordinarily should necessitate a downward review in the pump price. The increase in the ex-depot price implied that PMS will now sell for up to N175 per litre” in some parts of the country.
He argued further that inasmuch as the private sector of the Nigerian economy has clamoured for total deregulation of the downstream oil sector to enable market forces determine the price of petroleum products in the country, it is imperative that government should demonstrate a high level of transparency in the deregulation process.
“A deregulation system that inspires confidence among Nigerians will go a long way in assuaging the concerns as being expressed by Nigerians. The expected savings from deregulation should be ploughed into infrastructural development that will quicken economic recovery and elevate millions of Nigerians from the poverty line,” Olawale said.
The NACCIMA maintained that an increase in petrol pump prices, which is a major source of energy, would increase the cost of production for the real sector and consequently be passed to the consumers who have seen their purchasing power eroded.
The Director General of NACCIMA, Ambassador Ayo Olukanni, told THISDAY that the increase in petrol price should not be viewed in isolation from the current state of poverty, unemployment and inflation that have been ravaging the country’s economy.
Olukanni said: “The recent increase in price would appear as a move to ensure that prices of petroleum products reflect market realities. However, considering that the rising unemployment (over 21 million people unemployed as at Q2, 2020), rising food prices, (16.7 per cent on a year-on-year basis, as at September 2020) and an economy in decline (GDP growth rate of negative 6.1 per cent as at Q2, 2020), were further exacerbated by the closure of land borders and an increase in electricity tariffs.
“It is clear that an increase in pump prices of petrol (a major source of energy needs of the population) will increase the cost of production for the real sector, which will be passed to the consumers.”
He counseled the federal government to accelerate the effective implementation of all stimulus packages and intervention funds designed to support the production processes of the real sector in order to “stave off the looming economic recession and accelerate economic recovery,” adding that “there is an urgent need for some form of social safety net in the current situation, as well as the implementation of measures to reduce energy costs.”
The PPMC in a circular released last Thursday explained that it took the decision to increase the price of petrol, “after a review of the prevailing market fundamentals for the month of November 2020.”
The PPMC, a subsidiary of the Nigerian National Petroleum Corporation, (NNPC) had earlier increased the ex-depot price of petrol, to N155.17 per litre from N147.67 per litre, also with effect from yesterday.
The PPMC disclosed this in an internal memo with reference number PPMC/C/MK/003, dated November 11, 2020, and signed by Tijjani Ali.
The ex-depot price is the price at which the product is sold by the PPMC to marketers at the depots.
In its PMS price proposal for November, the PPMC put the landing cost of petrol at N128.89 per litre, up from N119.77 per litre in September/October.
The National Operation Controller, Independent Petroleum Marketers Association of Nigeria, Mr. Mike Osatuyi, said the over N7 increase in ex-depot price would translate into big increase in pump prices.
He said, “The implication of the increase in the ex-depot price is that there is going to be an increase in the pump price. We are expecting the pump price to range from N168 to N170 per litre.
“Crude oil price is going up,” he said, noting that the Federal Government has fully deregulated petrol prices.
Following the deregulation of petrol prices in September, marketers across the country adjusted their pump prices to between N158 and N162 per litre to reflect the increase in global oil prices.
Petrol price band had also risen from N121.50–N123.50 per litre in June to N140.80-N143.80 in July and N148-N150 in August.
The Minister of State for Petroleum Resources, Timipre Sylva said in September that the government had stepped back in fixing the price of petrol, adding that market forces and crude oil price would continue to determine the cost of the product.
With the international going rate of the product averaging $40.91 in September, on which the October pump price of between N157 and N161 was hinged and the $40.1 average price of crude oil in October, which would ordinarily determine the amount Nigerians buy petrol this month, pump price was at least expected to remain static or fall.
This month, Brent Crude and the Bonny light crude, Nigeria’s oil grades are both continuing to trade at an average of $40 per barrel.
Though the process of price determination remains largely opaque, Sylva had, while defending the government’s deregulation policy, stated that prices would move correspondingly with the fluctuations in crude oil prices.
The minister explained then: “When you say PMS, it is refined from crude oil and therefore whenever the crude oil price goes up, we will understand that the price of the refined goes up because the price of the fixed stock goes up.
“The derivatives from that feed stock are also bound to go up. Therefore, when the price of the feed stock went down, this government was able to transfer some of that joy to the public.
“And we have never minced word that when the price goes up, we will be seeing some movement at the pump which is what is happening today.”
Although the federal government insists that the current components of the pricing template, apart from the landing cost, include the National Transportation Average (NTA), the Nigeria Ports Authority (NPA) charges, marketers margin and transportation costs, calculations are almost always hazy with no cogent explanation from government officials.
Kano IPMAN Directs Members to Sell Petrol at N170 per Litre
The Kano State branch of the Independent Petroleum Marketers Association of Nigeria (IPMAN) has directed its members to sell petrol from N168 to N170 per litre.
The Kano branch, comprise Kano, Bauchi, Jigawa and the Katsina states, and according to its chairman, Bashir Dan-Mallam, who gave the directive while addressing newsmen in Kano yesterday, the association heeded the PPMC advice for the upward review of the pump price of petrol as contained in the circular from PPMC.
Dan-Mallam said: “I call on all our members within our branch to immediately change the price of their litres from N160 per litre to between N168 and N170 per litre.
“This development came after we received a circular from PPMC, advising us on the upward review of the price after it reviewed the market fundamentals for the month of November 2020.”
He assured the public of the association’s commitment to ensure steady fuel supply across the state and beyond.
N170 Fuel Price Wicked, Unbearable, Says PDP
Meanwhile, the Peoples Democratic Party (PDP) has rejected the rise in the price of petrol to N170 per litre, describing it as wicked, unbearable and unacceptable, particularly given the prevailing excruciating economic crunch already foisted on Nigerians by the Buhari administration.
The party insisted that the increase in the pump price would worsen the already suffocating economic situation in the country.
According to a statement issued by the National Publicity Secretary, Kola Ologbondiyan, “Such hike will also be an additional log tied on the economic neck of Nigerians.”
The PDP said the APC and its administration have no justification to increase the cost of petrol to anything above N100 per litre, not to talk of N170, when there are practical options to maintain affordable price given the production capacity and potentialities.
According to the PDP, “It is evident that the continuous increase in the pump price of PMS under opaque and nebulous indices is a product of incompetence and large-scale corruption being perpetrated by a few individuals in the Buhari administration, who are bent on fleecing Nigerians and holding our nation to ransom.
“Our party notes that the APC administration has failed to come clean on the parameters being used for the hike in prices vis-a-vis our production, export and accruing revenue.
“Indeed, the APC administration is not being honest with Nigerians regarding the status and volume of oil production, sales and accruing revenue,” the party said.
The PDP spokesperson further said that this was in addition to its failure to fix the refineries and end crude oil theft, allegedly to aid APC interests.
“This appears to provide answers to why the APC administration has failed to offer any explanation on huge fraud going on in the management of our nation’s oil resources, including the alleged stealing of over N9.6 trillion ($25 billion) by APC interests, as detailed in the leaked NNPC memo.
“It has also failed to publish details of its sleazy oil subsidy regime, including the involvement of APC interests in the claimed under-recovery for unnamed West African countries, running into trillions of Naira, while Nigerians are made to bear the burden of high fuel costs,” the PDP declared.
The main opposition party said: “Such humongous fraud in the management of our oil resources is responsible for the high costs and unspeakable hardship being suffered by millions of Nigerians who can barely afford their meals and basic necessities of life.
“Our party urges President Buhari to end the corruption and the stealing of our oil resource under his watch by APC leaders, recover the looted resources and immediately reverse this increase in price of fuel.”
It called on President Buhari to take steps to fulfill his promise to revamp the refineries or accept his failure and apologise to Nigerians.
The PDP said it was not too late for the president to get more competent hands to run the oil sector, instead of imposing more hardship on Nigerians.
NNPC Explains Increase
Meanwhile, the NNPC yesterday explained that the increase in the price of petrol was based on the prevailing realities of market forces of demand and supply.
It also said the corporation was aware of the purported increase in the PPMC’s ex-coastal price and ex-depot price (with collection) to N130 and N155.17, respectively.
NNPC said although there was an increase, but that the correct prices, as could be seen on PPMC’s Customer Express platform were ex-coastal price, N128; and ex-depot price (with collection), N153.17.
“The correct prices as can be seen on PPMC’s “Customer Express” platform (online portal for procurement of petroleum products) are: ex-Coastal price – N128, and ex-depot price (with collection) – N153.17,” it stated.
In a brief statement by the Group General Manager, Group Public Affairs Division, Dr. Kennie Obateru, the NNPC advised marketers to make their purchases through the online “Customer Express” platform (PPMCCustomer.Express/login/authenticate) at the recommended prices.