Fuel queues: Operating costs have rendered N165/l pump price unprofitable – oil marketers

THE Independent Petroleum Marketers Association of Nigeria (IPMAN) has expressed concern over what it considered as the high operating cost of running the supply and delivery of petroleum products across the country.

The association’s concern came in the midst of biting fuel scarcity and its consequent long queues at filling stations, especially in Lagos and Abuja.

IPMAN said the high operating costs had made the Federal government’s price band of N165 per litre pump price difficult to sustain and had been resulting in its members selling at a loss.


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The members, the association added, were being compelled to leave the business as a result of the “unfavourable” situation.

The IPMAN president, Chinedu Okonkwo, said of the development,  “We need to let the world know where actually this problem is coming from. Remember the N4 trillion subsidy is still there; this is to say the government has done its own part.

“The NNPC is the one importing this fuel and giving it to tank farm owners. Some of our members then get from the tank farm. Because of rising vandalisation, the NNPC prefers marketers to source fuel from tank farm owners.

“A situation where we get the product at N160 per litre from the NNPC, then bear the high transportation cost and other logistics, is not favourable to us. Some of our members are no longer in business as a result because they can hardly make profit.

“At the cost we are getting the product now, there is nothing for us to make a profit from. Some of our members are not in business. You heard the chairman of Ejigbo depot in Lagos lamenting. The regulatory agencies have to assist the private depots.”

Expressing a similar concern, the chairman of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Prince Billy Harry, said the government needed to involve over 40,000 retail outlets across the country in the supply value-chains.

Harry said, “We are back again to the fuel scarcity issue. The truth is that supply is not efficient. The full deregulation should be enforced and rules of engagement respected. The operating environment is hostile to us.

“Supply has always been a problem when retail outlets are not involved in the importation value-chain. The NNPC and the PPMC are importing. We have looked at our operating costs, they are on the rise, and we cannot sustain our business.”

He explained that over 200 per cent increase in the costs of diesel and transportation of products to retail outlets had put marketers under intense pressure.

“It’s not an easy thing to stay within the price band of N165 per litre when the landing cost is N180-N183.

“There is also more trouble when you are delivering at farther distances from depots and to the riverine areas. Yes, President Muhammadu Buhari recently approved increase in freight rates, but it’s not solving the problems.

“We can’t get the fuel to the people if the retail outlets are not working. Running a business at a loss is not ideal now because you cannot be struggling to sell at a loss. It doesn’t make any business sense.

“Unfortunately, most of us are depending on bank facilities to run our businesses, which makes it even more difficult for us, considering the high lending rate,” he added.

The PETROAN chairman advised the NNPC to get key stakeholders to the table to deliberate on ensuring that retail outlets were properly taken care of with adequate supply from depots close to the individual outlet.

He said, “The NNPC cannot be a judge and a complainant in its own case. We are the last line of the petroleum supply value-chain. We know the pain of the man or woman who can’t get a bus to transport his goods.

“We are the ones taking the brunt, so why not bring us to the table? Supply is not efficient because operating cost is soaring by the day.”

He suggested that locating tank farms across various regions in the country closer to retail outlets would help marketers and solve key problems in the petroleum supply process.

Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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