Bad news travels at the speed of light; good news travels like molasses QUIRKY JOKE
Click image to enlarge
Independent marketers of petroleum products and depot owners have revealed that the landing cost of imported petrol is now N145 per litre and above.
The marketers, who spoke with THISDAY at the weekend, said the development was responsible for their inability to import petrol with the foreign exchange provided by the international oil companies (IOCs) at N305 per dollar.
They also gave reasons why it is no longer possible for depots to sell petrol at the federal government’s approved N123.28 –N133.28 per litre ex-depot price band.
THISDAY’s investigation revealed that 13 depots that had stock of petrol at the weekend were selling between the prices of N136 and N141 per litre, against the official prices.
The South-west Zone of the Independent Petroleum Marketers Association of Nigeria (IPMAN) had even threatened to suspend lifting products from the depots over the hike in ex-depot price, saying that high ex-depot price would make the N145 per litre pump price unsustainable.
But speaking to THISDAY at the weekend, some of the marketers and depot owners said it was no longer possible to sell the product they imported or the ones allocated to them by the NNPC at official ex-depot price due to the high cost of foreign exchange.
Some of the marketers argued that the exchange rate provided to them at N305 per dollar by the IOCs is no longer sustainable.
One of the marketers said the high cost of forex was a serious challenge in the business, adding that 90 per cent of the product being distributed in Nigeria is imported by the NNPC because the forex intervention by the corporation was no longer working.
“If you collect foreign exchange from an IOC and import petrol for instance, you are going to land it at N145 per litre. If you land it at N145 per litre, you cannot even sell it because our official ex-depot price is N133.28. So if you land product at N145 and if you have to sell at the ex-depot price, which the DPR is obligated to enforce, you can see that nobody wants to touch the forex provided by the IOCs,” he said.
He argued that with the high cost of forex, the N145 pump price is no longer sustainable.
“It is no longer sustainable- it is no longer feasible because we land it at even more than N145 per litre. If you are unlucky and you accumulate demurrage, you might land it at N148. That is why no marketer is importing now. We are dependent on product imported by the NNPC, which I said is not sustainable,” he added.
Also speaking on the development, the Managing Director and Chief Executive officer of Mainland Oil and Gas Company Limited, Mr. Chris Igwe, told THISDAY that the only way out was for the government to liberalise the downstream sector or sell dollars to the marketers at N240.
“That way, there will be steady availability of product in the market. Or government should come by way of subsidy and give us foreign exchange at subsidised rate because today if we are going to import product and sell at official ex-depot price, government should sell dollars to us at N240 per dollar if they expect us to import products and sell at official ex-depot price,” Igwe added.
“Marketers have gotten their hands burnt many times. When they go and take money from the NNPC or an IOC to import and they land the product at a high rate and DPR will come and force them to sell at official ex-depot price and the marketer will get his hands burnt. No marketer wants to continue because you go into business to make profit,” Igwe explained.
Igwe lauded the efforts of the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu and the Group Managing Director of NNPC, Dr. Maikanti Baru, in sustaining the supply of petrol in the country.
On the over $1billion subsidy claims owed the marketers by the federal government, Igwe said the debt has made the banks to hike interest rates.
According to him, any marketer who borrows money today to import petrol or pay for allocation from the NNPC will end up working for the banks.
“Even to borrow money and import petroleum products today is not an option because the liquidity problems of banks have made them to increase their interest rates. So, if you borrow to import or pay the NNPC for allocation of petrol, you will find out that you are just working for the banks. So, we need government to seriously come to our aid by paying us the mature LCs that has run into over one billion dollars – yes, the whole amount owed marketers by the government is over $1 billion,” he said.
He noted that this fund was provided by the banks, stressing that if marketers go down on account of the unpaid debts, the banks will also go down.