Petrol price hike: IPMAN tackles NNPCL, threatens to stop operations
By Ibrahim Umar,
Kanempress News,
11th, October,2024
The Independent Petroleum Marketers Association of Nigeria has threatened to halt operations across the country following the high cost of Premium Motor Spirit, popularly known as petrol, sold to IPMAN members by the Nigerian National Petroleum Company Limited.
Kanempress gathered from IPMAN that on Thursday due to the cost of petrol from the Dangote Petroleum Refinery to NNPC was about N898/litre, but noted that NNPC was selling the same product to independent marketers at N1,010/litre in Lagos state.
The association, which controls over 70 per cent of filling stations across Nigeria, kicked against this and threatened to down tools.
The independent marketers also demanded a refund from Nigeria National Petroleum Company Limited for earlier petrol supply payments made by its members.
According to Kanempress, this development may further worsen the petrol scarcity and queues in many parts Nigeria.
Meanwhile, Kanempress gathered on Thursday that members of the Major Energies Marketers Association of Nigeria were still loading subsidised petrol from Dangote refinery, based on earlier arrangements with Nigeria National Petroleum Company Limited.
Speaking on Thursday, the National Publicity Secretary of IPMAN, Chinedu Ukadike, said the association may be forced to take action if the challenge between IPMAN and NNPC is not resolved immediately.
This development followed an earlier revelation by IPMAN national president, Abubakar Maigandi, that Nigeria National Petroleum Company Limited was asking independent marketers to buy petroleum products from its depot at N1,010/litre in Lagos State.
Maigandi, who spoke in a live television interview on Thursday, argued that the price was higher than what Nigeria National Petroleum Company Limited paid for the product from the Dangote refinery.
He also noted that independent marketers’ funds had been held by the national oil company, Nigeria National Petroleum Company Limited for about three months.
According to him, Nigeria National Petroleum Company purchased the product from the refinery at N898/litre but is asking marketers to buy it at N1,010/litre in Lagos state; N1,045 in Calabar; N1,050 in Port Harcourt; and N1,040 in Warri.
“Our major challenge now is that independent marketers have an outstanding debt from the NNPC and the company collected products through Dangote at a lower rate, which is not up to N900, but they are telling us now to buy this product from them at the price of N1,010/litre in Lagos; N1,045 in Calabar; N1,050 in Port-Harcourt; and N1,040 in Warri”, Maigandi stated.
He also pointed out that the association’s funds with NNPC had reached N15bn, stressing that independent marketers were eager to be fully involved in the petrol business and its components following the full deregulation of the sector.
Maigandi said, “Marketers want to be fully engaged in the business of petrol and its components. NNPC has been the one bringing in the product and loading and has an off-take in the Dangote refinery.
“We are now being allowed to import and there is no challenge on that issue. What we are after is to get the product directly from Dangote and not through NNPC. Currently, they owe us up to N15bn,” he pointed out.
The retail stations of Nigeria National Petroleum Company Limited had on Wednesday raised the price of petrol to N1,030 from N897/litre in Abuja, and in Lagos state, it was hiked to N998/litre from N868/litre. Other locations witnessed similar price hikes, a development which triggered anger among citizens.
The price hike, the second in one month, represents about 14.8 per cent or N133 rise.
However, the Organised Labour Congress and the Organised Private Sector had called for the immediate reversal of the hike in the pump prices.
With the latest price adjustment, Kanempress reports that in the less than 17 months of President Bola Tinubu’s administration, the price of petrol has risen by over 430 per cent from May 29, when he took over power.
On whether the Nigeria National Petroleum Company Limited NPC had reached out to resolve the issue with independent marketers, the National Publicity Secretary of IPMAN, Ukadike, responded in the negative.
Ukadike said the oil company had not provided any feedback or response following its last discussion with the marketers.
Ukadike said, “No changes or feedback at all. NNPC hasn’t responded to us. They haven’t returned our money. We are still observing what the situation would turn to since they haven’t reached out to us, or probably we would have to withdraw our services if the issue is not resolved.”
He, however, noted that efforts to reach Dangote for direct loading were in progress and a meeting between both parties expected to hold soon.
Ukadike also disclosed that its marketers would sell at a lower rate of N970/litre if allowed to purchase products directly from the refinery.
The IPMAN official said, “Any moment from now, Dangote will invite us, from the fillers we have received.”
On its pricing, he said, “If we start buying from Dangote at its current price, we will sell at N970, lower than the price of NNPC. Dangote sold to NNPCL at N898/litre. But they are asking us to buy from them at their pump price, can you imagine this kind of slavery? We continue to talk about price disparity every day and it’s there for all Nigerians to see.”
NNPC officials were not available to react to the position of IPMAN.
Similarly, officials at the Dangote refinery were not available to comment on the issues raised by IPMAN.
On the contrary, the Major Energies Marketers Association of Nigeria said it is not owed by NNPC, as it owns a large stock of storage systems to mitigate against sudden changes in petrol prices.
The Executive Secretary, MEMAN, Clement Isong, attributed the situation to its continuing relationship with Nigeria National Petroleum Company Limited.
Isong said, “We have storage tanks, unlike other oil marketers that only have trucks to transport directly to their filling stations. MEMAN is integrated. We have storage tanks, trucks and we have filling stations. So, we have products that we have bought into our storage tanks, which is a big difference from people who buy and take them straight to the station. They don’t have additional storage. We have depots and it takes a little bit longer for us to run out of stock, so we don’t face the challenge of being owed by the NNPC.
“We have a continuing relationship with NNPC and it is not the first time prices have gone up or down. That relationship means that when prices go up or down, we adjust. And so they continue to supply us. Everybody will charge its price according to its business strategy to optimise costs,” he said.
Subsidised petrol
This developed as a major oil marketer said that members of the group were still loading subsidised petrol from Dangote refinery, which they had earlier paid for through NNPC.
Major marketers had announced that NNPC sold petrol to them at N766/litre when it started lifting the product from Dangote refinery. Due to the capacity of the major marketers to buy the product in large volumes, they paid for the commodity massively and are still loading it from the Lekki-based refinery.
Local refineries produced 1.46 billion litres of petrol – Report
“The loading of this product may continue till the next two weeks before it will be exhausted and we will now start buying directly from Dangote without going through NNPC again,” a major dealer said.
On whether major marketers had started lifting petrol directly from Dangote refinery, another dealer replied, “I know the opportunity is open, but I cannot confirm if anyone has started yet. The one we are still lifting is the one we bought under NNPC.”
The dealer provided further explanation on the new petrol pricing regime in Nigeria, saying, “I believe the price of PMS has finally been deregulated, and subsidy has finally been eliminated. Henceforth, the price of PMS will be determined by market dynamics. This is inevitable as the government could no longer bear the burden of the subsidy.
“A good measure the government has taken to mitigate the development is the sale of crude oil to local refineries in naira at a fixed exchange rate. This will protect consumers from the negative impact of the fluctuations in exchange rates. The fact that the crude will be refined in local refineries will also save the cost of transporting crude to offshore refineries and transporting refined products back to Nigeria. Without these two factors, prices would have been higher,” the dealer explained.
“Another thing will be that the incentive to smuggle petrol from Nigeria to our neighbouring countries will be greatly reduced. Henceforth, prices can change at any time, depending on market dynamics. Customers will make informed choices about where to buy from. Operators will need to improve on safety, customer service, and accurate measurement to retain customers. This is also the time for consumers to consider alternative sources of powering their vehicles like CNG,” he said.
“The era of full competition has come to Nigeria. With time, things will settle down, and people will make informed choices. The government should invest in mass transportation, especially with CNG buses. Greater incentives should be given in terms of duty waivers on conversion kits and other CNG equipment and vehicles,” the dealer said.
Meanwhile, the landing cost of petrol has dropped to N975.89/litre, according to the latest data released by the Major Energies Marketers Association of Nigeria.
Crude oil prices and foreign exchange rates are the major factors determining the cost of refined petroleum products, including petrol, diesel, aviation fuel, and kerosene.
On Thursday, Brent crude futures settled at $77.41 a barrel, falling 60 cents, or 0.8 per cent. US West Texas Intermediate futures settled down 33 cents or 0.5 per cent, at $73.24 a barrel.
The decrease in the landing price is supposed to lead to a corresponding reduction in pump prices at filling stations across Nigeria pending the cost of transportation, storage, and distribution.
MEMAN data also revealed that the landing cost of Automative Gas Oil, also known as diesel stood at N1,076.35/litre, while that of Aviation Turbine Kerosene (ATK), known as aviation fuel stood at N1,111.97/litre.
Filling stations in the Federal Capital Territory, Abuja dispensed between N1,025 and N1,120 in different locations.
Total Energies, located at Sultan Abubakar Way, Zone 3, dispensed the product for N1,080. Eterna filling station at Obafemi Awolowo Way, Utako, sold at N1,120. Shafa filling station, located along Airport Road, sold at N1,050 while, NIPCO and Mobil fuel stations, both located along Airport Road, also dispensed the product at N1,025 per litre.
This development followed Nigeria National Petroleum Company Limited’s decision to terminate its exclusive purchase agreement with Dangote Refinery.
In light of the recent fuel price hike, concerns are mounting over its potential impact on Nigeria’s economy.
An Associate Professor at the University of Africa, Balyesa State, Dr. Onuche Unekwu, said, “As prices rise, demand will fall, leading to increased unemployment rates. This is a concerning cycle that can ensnare many households.”
Dr Unekwu emphasised the ripple effects of the fuel hike, noting, “People and businesses will become increasingly burdened. The rising costs are not just about fuel; they also frustrate production processes across various sectors.
“If the current trend continues, we could see millions more Nigerians facing poverty as essential goods and services become less accessible,” he stressed.
Regarding the impact on small businesses, Dr Unekwu expressed grave concerns.
“Many small enterprises operate on thin margins. With the higher costs of doing business, we risk seeing a significant number of them collapse, which could exacerbate unemployment and economic instability,” he said.
Unekwu’s views painted challenging road ahead for citizens as they navigate the complexities of rising costs and their implications for individuals and businesses.
