The Independent Petroleum Marketers Association of Nigeria has urged the Federal Government to halt the importation of Premium Motor Spirit, arguing that imported petrol has become more expensive than locally refined products and is frustrating efforts to stabilise prices in the downstream sector.
The association said the continued issuance of fuel import licences was worsening price volatility, putting additional pressure on the naira and undermining the competitiveness of domestic refineries, particularly the Dangote Petroleum Refinery.
Speaking with The PUNCH, the National Publicity Secretary of IPMAN, Chinedu Ukadike, said the recent import licences issued by the Nigerian Midstream and Downstream Petroleum Regulatory Authority had failed to achieve their intended objective of moderating domestic fuel prices.
According to him, petrol imported under the new licences is being sold at rates significantly higher than the price of products supplied by the Dangote refinery.
Ukadike said, “Independent marketers have looked at the issues of price volatility, import licences and the sale of petroleum products in dollars. I want to use this opportunity to urge the Federal Government to transparently review these issues through the Nigerian Midstream and Downstream Petroleum Regulatory Authority, which is the industry’s regulator.
“The recent import licences, which were expected to serve as a guide and a check on the prices of petroleum products refined locally, are not yielding the results we expected. We were shocked that the licences issued to depot owners to import petroleum products are resulting in prices of about N1,350 per litre, which is far higher than what Dangote has been selling to us.”
He stressed that the objective of allowing fuel imports was to create competition capable of checking domestic prices but noted that the policy had produced the opposite outcome.
“The essence of the NMDPRA and the Federal Government opening up import licences was to check domestic fuel prices. Instead, we have found that the imported products have questionable quality and are more expensive.
“What is the essence of issuing these licences? They will only create tension in society. Price volatility is deepening and is affecting independent marketers. We do not know what to expect or where to turn,” he said.
Ukadike maintained that imported petrol remained significantly more expensive than supplies from the Dangote refinery, questioning the rationale behind continued imports.
“The implied offshore price of petroleum products is almost 20 per cent higher than Dangote’s prices. So, what is the essence of importing products from Lomé when they are more expensive than Dangote’s? It does not make any sense. It is putting unnecessary pressure on the dollar and the naira.
“That pressure has pushed the exchange rate to about N1,400 to the dollar, which is also affecting petroleum product prices in Nigeria,” he added.
He urged the Federal Government to engage the Presidential Committee overseeing the naira-for-crude arrangement and resolve the challenges confronting the Dangote refinery to ensure an uninterrupted crude supply in naira.
“The Federal Government should sit down with the presidential committee to examine the challenges Dangote is facing and ensure crude continues to be supplied in naira so that Dangote can keep producing enough petroleum products for the country,” he said.
Ukadike noted that despite the disruptions to global oil trade during the recent Strait of Hormuz crisis, Nigeria continued to enjoy uninterrupted fuel supply because of domestic refining.
“One of the biggest gains Nigeria recorded during the crisis in the Strait of Hormuz was the uninterrupted supply of petroleum products from Dangote. If we already have continuous supply, then our challenge is pricing.
“Is it not better to address pricing than continue issuing unnecessary import licences that will only inflate fuel prices? Nigeria should put Nigeria first. Let us maintain and support the refineries we have,” he stated.
He appealed to the government to prioritise indigenous refining capacity, saying the country should support local refiners while positioning itself to earn foreign exchange from exports of refined petroleum products.
“We are talking about government-owned refineries, but this indigenous refinery has helped Nigeria avoid the embarrassment associated with the Strait of Hormuz crisis. We should support it and ensure fuel prices come down.
“Nigerians are suffering. This is the time for national unity. This is the time to support our industrialists and refiners producing petroleum products in Nigeria.
“Nigeria can also earn foreign exchange by exporting refined petroleum products. The government should ensure there is sufficient supply for local consumption while also supporting exports,” he said.
Reflecting on the country’s previous dependence on imported fuel, Ukadike said local refining had significantly strengthened Nigeria’s energy security.
“At this point, we must focus on strengthening our national economy, sustaining our ecosystem and ensuring uninterrupted petroleum product supply.
“I remember when we depended entirely on imported petroleum products. Sometimes we experienced shortages that lasted two or three weeks. Since the Dangote refinery commenced operations, there has been no fuel scarcity.
“Nigeria should focus on the benefits of domestic refining, reliable fuel supply and energy security,” he added.
The Federal Government has continued to issue import licences to oil marketers despite the commencement of large-scale operations at the Dangote refinery, with officials maintaining that imports remain necessary to promote competition and bridge supply gaps. However, industry operators have increasingly questioned the policy, arguing that locally refined petrol is now cheaper than imported supplies and that sustained support for domestic refining would help reduce pressure on foreign exchange, improve energy security and moderate fuel prices.
SOURCE: PUNCH NEWS PAPER
About The Author
You are my breathing in, I possess few web logs and sometimes run out from post :). “‘Tis the most tender part of love, each other to forgive.” by John Sheffield.