PMS marketers need $1.8b monthly for import as stakeholders move to resolve grey areas
Importers of premium motor spirit (PMS) will need about $1.8 billion monthly to meet import foreign exchange need as the government has put the exchange rate used for computing the current pump price at N650/$.
With Nigeria’s daily PMS consumption projected at over 60 million litres per day, marketers, including the Nigeria National Petroleum Company Limited (NNPCL), whose market share has been capped at 30 per cent, would need $60 million daily, amounting to $1.8 billion monthly to guarantee the supply of PMS alone.
Coming amidst the free-floating of the naira by the Central Bank of Nigeria (CBN), which pushed Investors’ and Exporters’ (I&E) window to between about N664/$1, the Chief Executive Officer of Nigerian Midstream Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed, said marketers are coming forward for import licences with about three cargoes expected in July.
The meeting, which brought together the NNPCL, Major Oil Marketers Association of Nigeria (MOMAN) and the Depot and Petroleum Marketers Association of Nigeria (DAPMAN), Ahmed said, was aimed at addressing the concerns in the subsidy removal in the country.
According to him, the development has bridged the gap in the importation of PMS to ensure energy security while addressing pricing and legacy issues on equalisation claims.
He said the Federal Government would not provide foreign exchange to any marketer, adding that the current exchange rate used in importing fuel stands at about N650 to one dollar.
“The current pump price took cognisance of the exchange rate of $650 to $1. If the naira improves, then the price would change. It can go either way,” he said.
Ahmed disclosed that the marketers agreed that NNPCL would continue to import until more operators can bring in the white products to prevent a shortage.
He stated that the agency was fast-tracking the process of issuing licences to marketers, noting that the regulator was constantly engaging stakeholders to ensure that there is no gap in the market.
Ahmed said the cost of moving trucks from one location to another had been considered and factored into the pricing as the agency would no longer provide equalisation for PMS bridging.
Ahmed disclosed that a possible review or amendment of the Petroleum Industry Act (PIA) was also being considered to enable every marketer import products, adding that discussion awaits further deliberations.
Ahmed pledged his commitment to transparency in the importation of PMS, adding that marketers would be granted licenses as long as they meet the requirements of the PIA.
“But again, at some time, we will look at the flexibility and the ease of the business to enable them import with ease,” he said.
Ahmed noted that the concerns of the quality of the product which would be imported remained a critical concern which was tabled at the meeting, stressing that “we deliberated on how to control and ensure that all the parties meet the requirements so that the consumer is not negatively affected.”
Meanwhile, the Natural Oil and Gas Suppliers Association of Nigeria (NOGASA) said marketers have no money to import petroleum products due to unsettled bills and stocks by NNPCL and NMDPRA.
President of the association, Bennett Korie, at a press conference said although the marketers were in support of subsidy removal, all is not well in the sector.
According to him, thousands of marketers, who have paid for petroleum products to the NNPCL over three months ago, are stranded and may be thrown out of business.
According to him, there is a crisis in the camp of the independent marketers across the country as 45,000 litres tanker of PMS jumped from N7 million to N21 million amidst the unwillingness of NNPCL to give the marketers the stock they had borrowed money to pay for months before subsidy was removed.
“Where do we get this money; banks are giving loans at a 30 per cent interest rate. So we are just wondering, that is another problem that nobody is talking about. They only talked about removing subsidy but did not consider these issues,” Korie said.
Earlier this week, NNPCL Retail had in a circular directed marketers to either consider merging their old orders or apply for a refund.
Korie insisted that the development remained unacceptable as loans were taken to pay for the product with accumulated interest.
With undelivered products standing at 202.5 million litres of PMS, The Guardian had reported that trouble started for the marketers, who claimed they had taken N37.05 billion loans with active interest when the NNPCL asked them to pay additional money N12.7 million on each of the 45,000 capacity trucks to claim their goods.
By implication, the market would need an additional N57.5 billion to claim the products they ordered at a combined price of N37 billion. These brought the total stock from an initial N37 billion to N94.5 billion as each truck now sells for N21.03 million.
Okorie noted that the government had also allowed bridging claims to accumulate over the years and did not bother to clear it until the decision to remove the subsidy was reached.
“We are using this opportunity to appeal to the government to please pay the market their bridging claims so that they will continue to do business,” Korie said.
Korie also asked the government to address the poor road network in that country, adding that the fund which should have been expended on subsidies should be used in fixing the road network in the country.
According to him, the rehabilitation of the government refinery has lingered so long and must be urgently fixed as the country cannot rely on the importation of petroleum products.
Also kicked against the direct transfer of funds to Nigerians as palliative for subsidy removal, asking the government to instead fund the agricultural sector to beat down the price of food.
