NNPC Incurs Losses as Marketers Shun Petrol Importation
With oil marketers shunning the importation of petrol due to dwindling margins, the Nigerian National Petroleum Corporation (NNPC) is incurring losses of between N8 and N10 per litre through the allocation of the product to marketers at a coastal price of N126.63 per litre, THISDAY’s investigation has revealed.
This translates to a loss of N350 million daily at the current estimated daily domestic consumption of 35 million litres of petrol. Investigations further revealed that for both NNPC and the marketers to import petrol and sell at the official price without incurring losses, the appropriate pump price should be N155 per litre. But NNPC spokesman, Mr. Ndu Ughamadu told THISDAY at the weekend that the corporation has not said it was subsidising petrol, stressing that even though the corporation also plays the role of a social supplier of products in periods of national challenges, there was no room for corruption under the present management. Ughamadu said to end the persistent fuel crisis that reared its head each time marketers stopped importation in the past, the Group Managing Director of the corporation, Dr. Maikanti Baru has reactivated some of the 21 NNPC depots across the country to ensure that products are pumped into the facilities via pipelines.
When the current retail price band of N135-N145 per litre took effect in May 2016, the Petroleum Products Pricing Regulatory Agency (PPPRA) had fixed the indicative ex-depot price at between N123.28 and N133.28 per litre for petrol. However, for petrol that is still in the mother vessel on the high sea, the ex-depot price or coastal price was fixed at N116.63 –N126.63 per litre, as marketers incurred additional expenses to hire daughter vessels to move the product to the depots. It was gathered that at the international market price of $510 per metric tonne for petrol as of Friday, the corporation was absorbing N10 per litre by allocating the product to the marketers at the coastal price of N126.63.
On concerns being raised that the losses being absorbed by the corporation could fuel allegations of corruption in the future, Ughamadu said there was no room for corruption under the present NNPC management. “The corporation, in addition to its numerous responsibilities, also plays the role of a social supplier of products in periods of national challenges to keep the nation wet. It is a priority. “The present NNPC management is very prudent, effective and efficient in managing resources. Therefore, no room for corruption,” he said. He said NNPC’s management, with the support of the federal government, had contained pipeline vandalism and brought many of the 21 depots back to operation, thus averting the fuel crisis that occurred each time marketers stopped importation. “In the immediate past, we had more use of private tank farms for the throughput because many of our depots were down due to massive pipeline vandalism. We could not pump to depots. “Today, NNPC management under Dr. Maikanti Baru, with the support of the federal government, has contained vandalism with many of the depots – Atlas Cove, Mosimi, Kano and others – now functional,” he added.
Some of the marketers, who spoke to THISDAY, stated that at the international market price of $510 per metric tonne, the landing cost of petrol stands at N141 per litre at the private depots. “So, when the products are allocated at N126.63 at the high sea, the corporation absorbs losses of about N8 to N10 per litre. Marketers cannot land the product at their depots at N141 and sell at the recommended ex-depot price of N133.28 per litre,” one of the marketers explained. THISDAY’s market survey revealed that even though the marketers source the products from NNPC at the coastal price of about N126 per litre, none of the 12 depots that had petrol at the weekend, including those doing throughput with NNPC, was selling at the official ex-depot price of N133.28. All the 12 depots, it was learnt, were selling at ex-depot prices of N137, N137.50 and N138 per litre, depending on the depot. “When you get the product from NNPC, you have to hire daughter vessels to take it to your depot and by the time you add up the cost, you must have spent up to N135 per litre,” one of the marketers added.
The Chairman of the Major Oil Marketers Association of Nigeria (MOMAN), Mr. Akin Akinfemiwa said only the complete liberalisation of the downstream sector would resolve the persistent supply and distribution challenges of fuel in the country. According to him, complete liberalisation would ensure the realisation of a potential turnover of $5 billion in downstream sector and boost investments. “There is one thing that gives me a lot of worry and there is one question I always ask myself and that question is: when will this sector be completely liberalised?” he asked. “The complete liberalisation of the sector is what is going to provide that solid foundation for investments to flow. Without that, we will not realise the potential of this $5 billion revenue in the sector,” Akinfemiwa said. Akinfemiwa, who is also the Group Chief Executive Officer of Forte Oil Plc, recalled that even before the federal government introduced the subsidy scheme, Ascon Oil Limited, Sahara Energy and Ocean and Oil (now Oando), had joined NNPC to import petroleum products into the country. He added that at a point during the subsidy regime, private marketers accounted for 60 per cent of importation of products, stressing that the private sector was always ready to play its role.