Some key stakeholders and players in the oil industry may soon be engaging the Federal Government on the recent developments in the industry especially as it relates to the recent sudden increase in the pump price of petroleum products in the country. The Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, and the Petroleum Products Retail Outlets Association of Nigeria, PETROAN for instance are uncomfortable with the development. They complained of lack of consultation by the relevant government agencies before announcing the price hike and have resolved to engage the federal government on the issue.
[wpdiscuz-feedback id=”ng672g13na” question=”Please leave a feedback on this” opened=”0″][/wpdiscuz-feedback]Appearing on Friday’s edition of the Channels Television breakfast programme, Sunrise Daily, the leadership of both the PENGASSAN and PETRAON faulted the position of the government on the removal of subsidy and deregulation. Timipre Sylva, minister of state for petroleum, had stated that “this country cannot at this time continue to afford this subsidy” noting that the country is spending over a trillion on subsidy every year. According to Sylva, “We decided that it was time to deregulate. What that meant was that government stood back from the business of importing and supplying products at the pump. We are no longer fixing prices, that’s what deregulation means… We have stepped back and we are allowing market forces to determine the price at the pump”.
[wpdiscuz-feedback id=”ng672g13na” question=”Please leave a feedback on this” opened=”0″][/wpdiscuz-feedback]But the President of PEROAN, Dr. Billy Gillis-Harry disagreed with the minister. A visibly agitated Gillis-Harry stated vehemently that “It is not the market forces that are determining the prices now. I beg to disagree with the Honourable minister. In my view, an ex-depot price was fixed yesterday (Thursday). We had a letter written to some of our members at N151.65 only three days ago. Just yesterday, they now changed the price again to N147.67. So, tell me, who discussed that? Was it the market forces that determined that? Who are the market forces? I, as the national president, I represent over two hundred and something retail outlets in this country. IPMAN is there that should be representing marketers; MOMAN is there representing major marketers. DAPMAN is there representing the depot marketers. Which of us made inputs into this new pricing of N147.67? The answer is that I don’t think anyone of us was”.
[wpdiscuz-feedback id=”ng672g13na” question=”Please leave a feedback on this” opened=”0″][/wpdiscuz-feedback]Some key stakeholders and players in the oil industry may soon be engaging the Federal Government on the recent developments in the industry especially as it relates to the recent sudden increase in the pump price of petroleum products in the country. The Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, and the Petroleum Products Retail Outlets Association of Nigeria, PETROAN for instance are uncomfortable with the development. They complained of lack of consultation by the relevant government agencies before announcing the price hike and have resolved to engage the federal government on the issue.
[wpdiscuz-feedback id=”ng672g13na” question=”Please leave a feedback on this” opened=”0″][/wpdiscuz-feedback]Appearing on Friday’s edition of the Channels Television breakfast programme, Sunrise Daily, the leadership of both the PENGASSAN and PETRAON faulted the position of the government on the removal of subsidy and deregulation. Timipre Sylva, minister of state for petroleum, had stated that “this country cannot at this time continue to afford this subsidy” noting that the country is spending over a trillion on subsidy every year. According to Sylva, “We decided that it was time to deregulate. What that meant was that government stood back from the business of importing and supplying products at the pump. We are no longer fixing prices, that’s what deregulation means… We have stepped back and we are allowing market forces to determine the price at the pump”.
[wpdiscuz-feedback id=”ng672g13na” question=”Please leave a feedback on this” opened=”0″][/wpdiscuz-feedback]According to him, “We heard about deregulation almost four months ago and can we say what we are seeing now is subsidy removal and deregulation? We also think that these are things that affect the ordinary Nigerian. So, it’s very critical that we must have a very transparent, honest discussion on this to look at all the variables – the inputs that should determine what the pricing and whatever that should be made known to the ordinary Nigerian. And we should not deliberately be fixing prices because it seems to me like the government today is operating from a private sector business man’s mind that is not seen and that is very critical to address”.
[wpdiscuz-feedback id=”ng672g13na” question=”Please leave a feedback on this” opened=”0″][/wpdiscuz-feedback]Concerned about frequent changes in fuel prices, Gillis-Harry said what they would expect to see in such a dialogue would be “what parameters were deployed in computing what the prices should be in a particular segment. And we should not be changing prices every month; it is not good for business. It does not allow for good planning. So, we need to be certain. What exactly are we doing? You heard the honourable minister say that they are removing their hands from importation and they want the market forces to determine the price. Those are some of the key elements that a stakeholders meeting should be able to discuss”.
Expressing the frustrations of his members, the PETROAN President stated that “The retail outlet, as you know, is the most critical in the petroleum distribution chain. We are the last man, and we are the most critical. Without us, there is actually nothing that could happen from crude oil exploration, down to this point. Your question is simple; were you consulted? The answer is no; we were not consulted. And we have written severally to the Federal Government through the minister to the PPRA to the GMD to the MD of PPMC that it is important to engage the real sector players.
[wpdiscuz-feedback id=”ng672g13na” question=”Please leave a feedback on this” opened=”0″][/wpdiscuz-feedback]“The real sector players would be MOMAN, IPMAN, DAPMAN, PETROAN, and relevant labour organizations. We have written severally that there is the need for a stakeholder meeting to review this. The government on itself cannot sit back on an armchair economic projection and put pricing that is going to affect a majority of Nigerians very adversely. Now, yesterday, you bought products at N145; today, you are going to buy product at the ex-depot price for N147.67k. Tell me, how is the marketer going to sell to get his return on investments? Minimum you will put it would be about N160, N162, or even N170. Who is going to bear the brunt? The Nigerian people! The Nigerian people are, just like the labour leader has just said, are already having problems because their pockets are crushed; they do not have the deep pocket to…”
Responding to why filling station owners were always quick to reflect new pump price increases while reluctant to adjust their metres when prices were reduced, Gillis-Harry said “It’s a simple case of a businessman’s hunger for profit”. He explained that “If petroleum prices were reduced today, of course the man who bought the product from ex-depot price at say N138.30k as it was just a few hours ago, will certainly not sell below his buying price. So, he has to try as much as he can to sell off as much as possible before he can buy, and which is justifiable in business.
[wpdiscuz-feedback id=”ng672g13na” question=”Please leave a feedback on this” opened=”0″][/wpdiscuz-feedback]“But if the prices go up, of course it is instant, For instance, prior to yesterday, the information was that we were going to buy product at N151.61k and most of us have already gone to the bank to start making negotiations for that kind of loan. Now, yesterday, in Port Harcourt at the refinery, we got a reprieve that the product is going to be sold at N147. 67k, and luckily, in Mosimi, the same thing; I tried to get Suleja and the rest of the depots so as also to know what they bought between yesterday and today.
“But obviously, it looks like the price is now flat at N147.67k. Now, why is that so? If this man now has to go back and look for additional nine or N10 per litre to buy a tanker of say 30,000 litres, that is additional N300,000. The banks will charge; he’s going to get the money somehow. If he’s selling at a loss, then he can never buy petroleum products again to sell at the retail outlet. It’s important that as Nigerians, we need to know that my members who are in hundreds of thousands across the country will always want to serve Nigeria in the best of our ability”.
[wpdiscuz-feedback id=”ng672g13na” question=”Please leave a feedback on this” opened=”0″][/wpdiscuz-feedback]Gillis-Harry insisted that “One of the ways we can do that is by understanding exactly the price mechanism that the PPRA, the PPMC and NNPC compute their prices” stressing that “If at this time they are not able to take us into confidence, let us know this is what we are doing; this is how we want to do it, and then share market intelligence and information with us, it will not be right to…I can tell you it will get to a point where retail outlets will say sorry, we don’t have money to buy petroleum products so we are no longer interested in this business”.
He however argued that the issue was not about lowering of prices but “about a righting of price” adding: “When price is right, you give adequate information to the buying public. It is the size of the pocket of the ordinary Nigerian that should be considered when most things are being done because you do not expect somebody who is farming in the suburbs in the villages that lives in Abeokuta to trek down to his farm and then come back; he must have to use a truck or something to be able to be highly productive. So, what would be required in the dialogue would be absolute truth and transparency in information sharing”.
Also aligning with his PETROAN counterpart, Festus Osifo, PENGASSAN president, said “For me, and for us in PENGASSAN, we think that in the next few days, we will be working closely with our umbrella body, the Trade Union Congress, to effectively engage the government because what is even happening today is not actually subsidy removal. When you remove subsidy totally then the price, you could buy petroleum products in Lagos may be a bit different from the price that you could buy in Calabar. Yes, I understand the need for stabilisation and equalisation of prices, but we think that in the next few days, we would be engaging the government, engaging all stakeholders. Let us come to the table, let’s bring all the facts to the table; what are the points, how did you arrive at the cost. And moving forward, what is going to be the trend; not a situation whereby the marketers, the consumers wake up on a daily basis and you keep seeing increment in prices”.
[wpdiscuz-feedback id=”ng672g13na” question=”Please leave a feedback on this” opened=”0″][/wpdiscuz-feedback]Like Gillis-Harry, he did not agree that the industry is deregulated. Osifo posited that “The fact that the price is being fixed, there is a kind of semi-regulation at the end of the day…It is still a semi-regulated environment”.
Asked how the Dangote Refinery would impact on the prices of petroleum products, Osifo said it is expected pump prices would reduce. According to him, “because of the fact that part of the cost drivers of the Dangote Refinery is going to be in Naira, then, we are actually expecting the pump price to reduce. He was however quick to warn that “government should not just fold its arm; the organised labour should not just fold their arm, and wait for Dangote Refinery to come in. What is happening to our existing refineries, the question must be asked and solution must be proffered”.
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