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Fuel scarcity bites harder in Lagos

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More filling stations closed to motorists across Lagos metropolis and its environs yesterday while the few that sold had long queues of vehicles. The petrol stations hiked prices of petrol between N205 and N220 per litre. However, a few filling stations operated by major marketers sold at N185 per litre.

The resurgence of queues at the pumps is not unconnected with the sharp increase in operational cost of getting prevailing situation where marketers and depot owners are challenged with sourcing foreign exchange (forex) to continue their operations locally.

The implication of this is that depot owners and independent marketers are beginning to shun petrol supply owing to the rising cost of the dollar against the local currency and the inability to source such money. This development as led to a sharp reduction in the supply of the commodity.

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The Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN), Clement Isong, told The Nation that although there are vessels laden with petrol imported by the Nigeria National Petroleum Company Limited (NNPCL) on the high sea waiting to discharge, the cost of hiring daughter vessels for the operation has been discouraging due to the high cost.

Mother vessels are tanker ship that brings the product into the country but berth in the high sea, while daughter vessels are those used in conveying the product from the point of berthing in the high sea to the port before it is emptied into depot tanks.

According to Isong, hiring a daughter vessel to bring the product from onshore to offshore now cost $45, 000 per day as against the previous $20, 000 per day it used to cost because of the high cost of diesel. This is aside other charges paid including the Nigeria Ports Authority (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA) among other charges.

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“The challenge remains the exchange rate and the scarcity. It is very difficult to get the dollars. A daughter vessel is hired for 10 days to discharge the content from the mother vessel; this means that it has shot up from $200, 000 to $450, 000. Then marketers and depot owners also pay NPA and NIMASA charges in dollars. Yet, the dollar is scarce and difficult to get,” Isong explained.

This situation, he further explained, accounts for why many marketers and depot owners will refuse to go and lift petrol from the mother vessel and when some of them lifts, then they have to factor in the cost of the dollar and other logistics cost at their depot because no business like to operate at a loss.

In similar vein, the Executive Secretary, Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN), Olufemi Adewole, observed that the impact of forex on the business is huge. He explained that his members, earlier in the year, used to chatter daughter vessels for their operations at the rate of $25, 000 – $35, 000 per day, at an exchange rate at that time was N385/$1.

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“Today, we are chattering daughter vessels at $70, 000 per day; at a point, the exchange rate hit N900 but eventually dropped to N750 few days ago in the parallel market. So somebody has to take this cost. So, any cost that a marketer incurs in the process of bringing the product to you in the retail outlet has to be recovered,” Adewole explained.

DAPPMAN’s Chairman, Mrs. Winifred Akpani, at an earlier briefing in Lagos, explained that marketers pay through their noses to get petrol now and are also heavily yoked with huge charges which are denominated in foreign exchange. She blamed the difficulty in accessing forex at the official Central Bank of Nigeria (CBN) rate as being responsible for the price differential in petrol distribution in the country. She decried what she termed the “absence of a level-playing field” that guaranteed access to dollars for all marketers at official rates.

Giving a breakdown of the extra charges incurred by marketers, Mrs. Akpani revealed that on a vessel carrying 20,000 metric tons of petrol within Nigeria, charges like jetty fees, which is also charged in dollars, amounts to N15.4 million at official forex rates and N30.8 million for petroleum marketers who source from the parallel market.

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“In addition, jetty berth is charged in dollars and comes to N2.2 million at official forex rate and N4.4 million at parallel market rate. While port dues, charged in dollars by the NPA and NIMASA come to N71.51 million at official forex rate and N142.796 million for marketers who source forex from the parallel market,” she said.

The National Operations Controller, Independent Petroleum Marketers Association of Nigeria (IPMAN), Mike Osatuyi, exclusively told The Nation, that marketers are finding it increasingly difficult to source the commodity owing to the shortage in supply. Those that have to sell, he explained, have had to go the ‘extra mile’ to get supply to their filling stations.

Osatuyi, yesterday explained that at the moment, most of his members cannot source the commodity because of the supply shortage that has lingered. Besides, he said getting petrol to members’ filling stations from the depots now costs as much as N200 per litre in some instances.

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“It is a sad development. Some of my members now pay as much as N200 per litre to buy petrol from the depot, including cost of transportation and other charges incurred. So in this situation, how much do you think we will sell petrol at the pump?” he asked rhetorically.

He maintained that the fuel situation is not likely to ease up except government finds a lasting solution to the supply issues and cost. One way to address this is the implementation of total deregulation of the downstream sector of the oil industry.

“Total deregulation remains the best solution to ending fuel scarcity. The deregulation of the downstream sector remains the only potent and lasting solution to this scarcity. But the cost implication of the policy will make the price of petrol too expensive for Nigerians, as deregulation will shift the burden from the government to users of the product,” Osatuyi told The Nation, adding that payment of subsidy is no longer sustainable. He urged Nigerians face reality now to avoid the unpalatable experiences that is usually the fallout of scarcity.

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Officially, petrol per litre still remains at N162 to N165 per litre as fixed by the federal government. However, for over four months now, no filling station has sold petrol at less than N169 per litre, including the Nigeria National Petroleum Company Limited (NNPCL), retail outlets.

The Chairman of IPMAN Western zone, Dele Tajudeen, explained that private depots are taking advantage of the NNPC Limited’s inability to make supply available to hike the commodity’s price. He argued that to keep the business running and to avoid a total paralysis on the region in the event of marketers shunning selling the product, his members opted to patronise private depot irrespective of the hike in price.

“Buying at N178 per litre from depots and selling at N170 or N180/litre is not realistic. Our members have no other option than to sell between N195 and N200 per litre within Lagos, Ogun, and Oyo states. We will sell between N200 and N210 in Kwara, Ondo, Osun, and Ekiti states,” Tajudeen said.

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