The Independent Petroleum Marketers Association of Nigeria (IPMAN) says it is impossible to sell Premium Motor Spirit (PMS) at the government-approved price because the costs and margins of importing the commodity stands between N160 and N167/litre.
The group said only a special intervention from the government to enable them access foreign exchange at a special rate will make the N145 pump price of fuel viable.
Mike Osatuyi, National Operations Controller of IPMAN, said the problem became more pronounced following the increase in the international price of crude oil to $59 per barrel.
Osatuyi made these comments while explaining the fuel scarcity currently being experienced across the country.
“The problem is that the importation (of petrol) is being handled almost 100 per cent by the Nigerian National Petroleum Corporation as private importers have backed out because the increase in crude price has made the landing cost enter subsidy,” Osatuyi said.
“When the crude price hit $59 per barrel, we could not sell petrol again at N145 per litre if we were importing on our own. It is only the government (NNPC) that is importing and can warehouse the subsidy.
“Right now, the landing cost of the PMS is N154. If you are importing at N305 to the dollar, by the time you add bank charges, it comes to N307 to the dollar.
“If you apply that to the current crude price, the landing cost is N154-N155. By the time you add all the margins, the pump price is about N160-N167.
“Before private importers can resume importation, the exchange rate to a dollar must be N250 and we can sell at the price of N145 per litre.”
Similarly, Obafemi Olawore, Executive Secretary, Major Oil Marketers Association of Nigeria, agrees that only a special exchange rate will enable them resume importation.
“I am told that some people have special rates. If they do, fine; let them give to us also. We will prefer a situation where we have access to forex exchange and we can import.”
Also speaking on the issue, Muda Yusuf, Director General of the Lagos Chamber of Commerce and Industry (LCCI), said the problem of recurrent fuel scarcity is due to a fundamental problem with Nigeria’s downstream sector.
“It’s unfortunate that fuel queues have returned. But there is a very fundamental problem with our petroleum downstream sector, and the problem is that it is over-regulated,” Yusuf said during an interview with The Punch.
“You cannot have a sector as big as that serving our size of population and we expect only the government provider to be supplying fuel. It is not a sustainable model.
“So, there is an urgent need to push back the role of government in the issue of retailing fuel, importing fuel and all of that.
“Right now, it is only the NNPC that is importing the PMS. Such a thing cannot be efficient; it creates room for all manner of abuses; some of which the marketers cannot disclose because of their own businesses.”
The ongoing fuel scarcity has led to a more than 100% increase in the transportation prices.
Before now, the bus fare from Abuja to Onitsha, Anambra State, was between N4,500 and N5,500, but as of Sunday it was hovering between N12,000 and N15,000.
Reports say petrol sell for between N250 and N350 per litre in almost the cities of Nigeria except Lagos and Abuja, where queues stretch for several kilometres.
President Muhammadu Buhari, who is also the substantive Minister of Petroleum Resources, is yet to make any comments on the issue.