Category: Business / Economy

Subsidy Face-off: Federal Gov’t Speeds Up Implementation of MoU To Avert Industrial Action

Posted on by Energy and Business Media

When Tuesday, October 30, 2023, President Bola Ahmed Tinubu wrote to the Senate to seek approval for N2.18trillion Supplementary Budget, he did not mince words in pointing at the urgency of the matter at issue.

Urging the Senate to “speedily” approve the budget, it was obvious, even to the law makers that the matter at hand requires expeditious attention.

And at the heart of that request, requiring speedy attention is the implementation of the 15-point Memorandum of Understanding (MoU), signed by the government and Labour Unions Leaders on October 3, 2023 in Abuja.

The agreement includes the Federal Government approval of a wage award of N35,000 to all Federal Government workers beginning from the month of September pending when a new national minimum wage is expected to have been signed into law, suspension of collection of Value Added Tax (VAT) on Diesel for six months beginning from October, 2023.

Federal Government also agreed to vote N100 billion for the provision of high capacity CNG buses for mass transit in Nigeria. The Federal Government also agreed to pay N25,000 per month for three months starting from October, 2023 to 15 million vulnerable households, including pensioners, commitment on the part of the federal government to the provision of funds as announced by the President on the 1st of August broadcast to the Nation for Micro and Small Scale Enterprises. The MSMEs beneficiaries should commit to the principle of decent jobs.

The situation today is that the federal government, in a bid to stave off disruptive labour unrest, has commenced the implementation of the MOU.

The Supplementary Budget which the President sent to the Senate on Tuesday requiring speedy treatment was in a bid to appropriate the needed funds for the implementation of critical aspects of the MOU.

In that N2.18 trillion Supplementary Appropriation is the sum of N210 billion for the agreed wage award and another N400 billion for Cash Transfer to vulnerable households, while another N200 billion is for Seed and Agricultural Inputs and Equipment

Just last week Friday, seven CNG Conversion Centers were inaugurated with more coming up across the country, according to Zach Adedeji, Chairman of the CNG Conversion Committee, while two CNG buses were handed over to Olusesan Adebiyi, the State House Permanent Secretary, at the presidential villa, Abuja.

Provisions are also being made for initial 55,000 CNG conversion kits to kick start an Auto Gas Conversion Programme.

On Refineries, the Presidential Committee had visited the Refineries, ascertained their rehabilitation status and assured the nation that Warri Refinery and Petrochemicals would resume pumping of fuel before the end of the year.

In listening to the yearnings of the Academic Staff Union of Universities (ASUU), the President , Bola Ahmed Tinubu, last week approved a partial waiver of the “No Work, No Pay” order on members who participated in the last 8 months long strike and ordered the release of four months of their withheld salaries.

https://googleads.g.doubleclick.net/pagead/ads?gdpr=0&us_privacy=1—&gpp_sid=-1&client=ca-pub-7274163950528935&output=html&h=280&adk=3995832516&adf=2477219859&w=848&abgtt=6&fwrn=4&fwrnh=100&lmt=1747692134&num_ads=1&rafmt=1&armr=3&sem=mc&pwprc=8204113141&ad_type=text_image&format=848×280&url=https%3A%2F%2Fleadership.ng%2Fsubsidy-face-off-federal-govt-speeds-up-implementation-of-mou-to-avert-industrial-action%2F&fwr=0&pra=3&rh=200&rw=847&rpe=1&resp_fmts=3&wgl=1&fa=27&uach=WyJXaW5kb3dzIiwiMTMuMC4wIiwieDg2IiwiIiwiMTM2LjAuNzEwMy4xMTQiLG51bGwsMCxudWxsLCI2NCIsW1siQ2hyb21pdW0iLCIxMzYuMC43MTAzLjExNCJdLFsiR29vZ2xlIENocm9tZSIsIjEzNi4wLjcxMDMuMTE0Il0sWyJOb3QuQS9CcmFuZCIsIjk5LjAuMC4wIl1dLDBd&dt=1747692112038&bpp=1&bdt=15608&idt=1&shv=r20250515&mjsv=m202505130101&ptt=9&saldr=aa&abxe=1&cookie=ID%3D2366b8f112572227%3AT%3D1747692104%3ART%3D1747692104%3AS%3DALNI_MYD1kuFgdmrAeUVvWJsV8TvwWVFyw&gpic=UID%3D000010bc37ef4b69%3AT%3D1747692104%3ART%3D1747692104%3AS%3DALNI_Ma6SVsK0QK9tAgg3_JsHDy6GyOoHg&eo_id_str=ID%3D8b07c894f35596fe%3AT%3D1747692104%3ART%3D1747692104%3AS%3DAA-AfjZYB-xYnjdMdv2z6SP-IEWV&prev_fmts=0x0%2C848x280%2C848x280%2C1585x679%2C1005x124%2C848x280&nras=7&correlator=2030989964683&frm=20&pv=1&u_tz=-420&u_his=2&u_h=900&u_w=1600&u_ah=852&u_aw=1600&u_cd=24&u_sd=1&dmc=8&adx=223&ady=3532&biw=1585&bih=679&scr_x=0&scr_y=846&eid=95360548%2C31092425%2C95353386%2C95360958%2C95360949&oid=2&psts=AOrYGslb6EcUGuJh96k4x1cam5xuTBmusDkVB3oRfC0HUcPs6lMU-FyCIcPvn9C908JDdZzNn7W15iVtDnyHE2hFSpBtiooNOLuDdvQkvPghAxAzAxI%2CAOrYGskguoEbIqCZnbN2IwqGh1erqfrr-gvGtCho5txJQ2gK6u3-k8d5LpQguObeU-PvGqw-zhAB8JsbbQke7rw%2CAOrYGsnS5iF4DNDXh18IOBTfdxytijhf6qrdJcFx3hGQ3MA6eLcVTVtDfAjpUbXrfwVSt499PDtRvSJbxvrlnxA&pvsid=7326685748225508&tmod=305997779&uas=3&nvt=1&fc=1408&brdim=0%2C0%2C0%2C0%2C1600%2C0%2C1600%2C852%2C1600%2C679&vis=1&rsz=%7C%7Cs%7C&abl=NS&fu=128&bc=31&bz=1&td=1&tdf=2&psd=W251bGwsbnVsbCxudWxsLDNd&nt=1&pgls=CAEQBg..&ifi=7&uci=a!7&btvi=5&fsb=1&dtd=22009

In a similar vein, in commemoration of the 2023 International Day for the Eradication of Poverty last week, President Tinubu launched the disbursement of N25,000 to 15 million households for three months as a social safety net.

To complement the efforts of the Federal Government and avert a face off with Labour is the commendable moves by some private sector players as exemplified by the Depot and Petroleum Products Marketers Association of Nigeria, DAPPMAN, an Association that threw its weight behind the government’s decision to end the subsidy regime and to deregulate the downstream sector of the oil industry. DAPPMAN, leading other oil marketers, are now ready to donate a number of CNG buses to the federal government to help mitigate the effects of petrol subsidy removal.

https://googleads.g.doubleclick.net/pagead/ads?gdpr=0&us_privacy=1—&gpp_sid=-1&client=ca-pub-7274163950528935&output=html&h=280&adk=3995832516&adf=2051561935&w=848&abgtt=6&fwrn=4&fwrnh=100&lmt=1747692134&num_ads=1&rafmt=1&armr=3&sem=mc&pwprc=8204113141&ad_type=text_image&format=848×280&url=https%3A%2F%2Fleadership.ng%2Fsubsidy-face-off-federal-govt-speeds-up-implementation-of-mou-to-avert-industrial-action%2F&fwr=0&pra=3&rh=200&rw=847&rpe=1&resp_fmts=3&wgl=1&fa=27&uach=WyJXaW5kb3dzIiwiMTMuMC4wIiwieDg2IiwiIiwiMTM2LjAuNzEwMy4xMTQiLG51bGwsMCxudWxsLCI2NCIsW1siQ2hyb21pdW0iLCIxMzYuMC43MTAzLjExNCJdLFsiR29vZ2xlIENocm9tZSIsIjEzNi4wLjcxMDMuMTE0Il0sWyJOb3QuQS9CcmFuZCIsIjk5LjAuMC4wIl1dLDBd&dt=1747692112045&bpp=2&bdt=15616&idt=2&shv=r20250515&mjsv=m202505130101&ptt=9&saldr=aa&abxe=1&cookie=ID%3D2366b8f112572227%3AT%3D1747692104%3ART%3D1747692104%3AS%3DALNI_MYD1kuFgdmrAeUVvWJsV8TvwWVFyw&gpic=UID%3D000010bc37ef4b69%3AT%3D1747692104%3ART%3D1747692104%3AS%3DALNI_Ma6SVsK0QK9tAgg3_JsHDy6GyOoHg&eo_id_str=ID%3D8b07c894f35596fe%3AT%3D1747692104%3ART%3D1747692104%3AS%3DAA-AfjZYB-xYnjdMdv2z6SP-IEWV&prev_fmts=0x0%2C848x280%2C848x280%2C1585x679%2C1005x124%2C848x280%2C848x280&nras=8&correlator=2030989964683&frm=20&pv=1&u_tz=-420&u_his=2&u_h=900&u_w=1600&u_ah=852&u_aw=1600&u_cd=24&u_sd=1&dmc=8&adx=223&ady=3529&biw=1585&bih=679&scr_x=0&scr_y=1167&eid=95360548%2C31092425%2C95353386%2C95360958%2C95360949&oid=2&psts=AOrYGslb6EcUGuJh96k4x1cam5xuTBmusDkVB3oRfC0HUcPs6lMU-FyCIcPvn9C908JDdZzNn7W15iVtDnyHE2hFSpBtiooNOLuDdvQkvPghAxAzAxI%2CAOrYGskguoEbIqCZnbN2IwqGh1erqfrr-gvGtCho5txJQ2gK6u3-k8d5LpQguObeU-PvGqw-zhAB8JsbbQke7rw%2CAOrYGsnS5iF4DNDXh18IOBTfdxytijhf6qrdJcFx3hGQ3MA6eLcVTVtDfAjpUbXrfwVSt499PDtRvSJbxvrlnxA&pvsid=7326685748225508&tmod=305997779&uas=3&nvt=1&fc=1408&brdim=0%2C0%2C0%2C0%2C1600%2C0%2C1600%2C852%2C1600%2C679&vis=1&rsz=%7C%7Cs%7C&abl=NS&fu=128&bc=31&bz=1&td=1&tdf=2&psd=W251bGwsbnVsbCxudWxsLDNd&nt=1&pgls=CAEQBg..&ifi=8&uci=a!8&btvi=6&fsb=1&dtd=22364

According to DAPPMAN chairman, Dame Winifred Akpani, the donation is to support the federal government’s post-subsidy palliative measures.
She said: “We collectively agreed that we’re going to work at providing real mass transit buses that work. The ones that run on CNG, which is a compressed natural gas and diesel interchangeably,” the DAPPMAN Chair said.

For this marketers’ association, it is walking the talk. DAPPMAN had been in the forefront of the calls for the removal of fuel subsidy affirming repeatedly that it will put an end to fuel scarcity, eliminate unnecessary hardship on Nigerians seeking to buy fuel, reduce waste and stimulate responsible consumption of this petrol .

Now that the federal government has yielded to the calls and abolished the subsidy, DAPPMAN has also taken the lead in support of government’s bold and creative actions towards cushioning the harsh effects of the subsidy termination.

Another good news is that of the planned injection of fresh $10 billion into the Nigerian economy in the coming weeks. This, the Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun says would provide the much-needed relief to a liquidity squeeze that has been adversely affecting the Naira.

He emphasized that the substantial inflow is expected to play a significant role in bolstering Nigeria’s economic stability and alleviating the pressures on the national currency.

It is also anticipated that the fresh inflow will help to open the official forex window to oil marketers to accelerate their quick return to business and begin fuel importation to help stabilise fuel supply and distribution.

Other experts have added that government should look into streamlining the cost of importation of fuel by charging the taxes in local currency. This, they insist, will reduce the cost of fuel import and further help to reduce the price of fuel for Nigerians thus complementing government’s much needed efforts in this direction.

Other efforts by the government to boost forex inflow is the $3bn emergency loan the Nigerian National Petroleum Company Limited (NNPCL) secured from Afreximbank.

An analyst said: “Goldman Sachs is an external asset manager to the CBN, so using NNPC’s account that CBN manages with Goldman as an unsecured credit line to tap $10bn for the purposes of clearing outstanding forwards and stabilizing the exchange rate back to the N800 range is plausible,” he said.

“This means that Goldman Sachs will net off gas revenues from WAGPCO and NLNG over an extended period to repay back.”

This approach, which involves an upfront cash loan against proceeds from a limited amount of future crude oil production, was used by the NNPCL to secure the $3 billion emergency loan from Afreximbank.

With all these proactive measures aimed at meeting the agreements reached with labour and to reignite the economy with the ultimate objective of engendering economic growth and alleviating poverty, the contention out there is that the labour/government face off is about to be resolved for the benefits of all Nigerians.

Said Olusesan Ige, an Abuja based Media Content Creator: “The fact on ground today is that the federal government has shown good faith, good intentions, it is obvious, even for the Labour also to see. The issue of ultimatum no longer holds. I think labour will sheath the sword now that all their requests are being swiftly attended to.”

NNPCL, Marketers Disagree over Queues at Fuel Stations

Posted on by Energy and Business Media

*NNPCL allays fears, insists it has addressed cause of scarcity

As long queues appear in fuel stations in Abuja and Lagos, the Nigerian National Petroleum Company Limited (NNPC) and oil marketers have disagreed over the cause of the fuel scarcity.

NNPCL had Thursday acknowledged the fuel queues in some states of the federation, but assured that things would soon return to normal. Marketers are however insisting that supply is drying up as NNPCl rations fuel to depot owners

In a brief statement on its X/Twitter page, the national oil company stated that the root cause had been addressed, even though it failed to list the challenges it was facing.

In recent days, fuel scarcity had resurfaced across Nigeria as many oil marketers shut their outlets against motorists, citing unfavourable market conditions.

Although the problem was mostly around Abuja and environs in recent weeks, however, it got to Lagos in the last few days, causing long queues and traffic jams in Nigeria’s commercial centre.

But in the statement released by the retail arm of NNPC, it urged motorists to desist from panic-buying, noting that it has enough product in stock.

A number of privately-owned filling stations had also used the opportunity of the scarcity to raise fuel prices from about N615 to N625 in the Abuja axis, even though the NNPCL reduced its own price to N612.

“NNPC Retail Limited notes the appearance of fuel queues in some parts of Lagos and a few other locations around the country. This is due to reduced depot load-out in Apapa, Lagos over a few days, and the root cause has since been addressed.

“We assure all Nigerians that there is ample supply with sufficiency of at least 30 days. Motorists are advised to desist from panic buying as distribution will normalise over the next couple of days,” the NNPCL statement said.

Oil marketers who were recently licensed by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), over 90 of them, had also complained of lack of access to foreign exchange to import products.

Industry players fear that the noticeable emerging queues in many fuel stations may soon spread throughout the country and may become even more intense as oil marketers can no longer replenish their fast depleting stocks. 

NNPC Limited, now the sole importer of petrol, sources revealed, has drastically reduced fuel supply to Depot owners, thereby leaving independent marketers who rely on the Depot owners for their supplies stranded.

According to highly reliable downstream industry sources, NNPCL, for reasons that are not yet clear, has now adopted a policy of supplying product to only depot owners with at least 50 fuel stations.

Although weeks back, NNPC Group Chief Executive Officer, Mele Kyari, assured that there was no need to panic as there was enough stock, in excess of 1bn litres, industry players are today troubled by the fact that NNPCL now focuses its full attention on supplying  products to only its retail outlets.

There are fears that most retail stations in the country may run out of fuel supply in the days ahead as only about 60 per cent of the Depot owners have up to 50 retail stations, which is claimed to be the NNPC new criterion for being eligible to be supplied product. 

Said a source: “What we face now is an imminent collapse of the sector and a return to an era of acute fuel shortage with the attendant disruption to socio-economic life.

“With Depot owners not able to import product owing to shortage of dollar and now NNPC  which earlier claimed to have enough stock not supplying to most marketers, you can imagine what the supply situation will be in the days ahead.”

Hardest hit by this latest development are the independent oil marketers who have filling stations scattered all over the country, but rely on Depot owners for their supplies.

“If the independent marketer with two or three stations in some strategic remote areas of the country cannot get supply and the big players can also not receive supplies from NNPC and with NNPC not having enough retail outlets to meet the fuel needs of Nigerians, it is obvious that we are returning to the era of serious fuel crisis”, the source added.

“If indeed there is enough stock as NNPCL claimed weeks back, and realising that the Depot owners are now handicapped and unable to import because of the challenges of forex, what then will inform its decision to be rationing fuel at this critical point in time? NNPCL needs to come clean on this serious issue,” an oil marketers executive noted. 

From all indications, the federal government will have to move fast by either fast tracking its strategies of easing the forex crunch to enable Depot owners resume fuel importation or compel NNPC to flood the market with the product, or both.

FOREX Scarcity: Resolving Oil Marketers’ Major Challenge

Posted on by Energy and Business Media

With rising foreign exchange rate and crude oil prices in the international market, Nigeria’s economy  is, no doubt in dire straits.

Since May 29, 2023 when the President, Bola Ahmed Tinubu, announced subsidy removal on Premium Motor Spirit (PMS) popularly known as petrol, Nigeria’s economy has continued to face excruciating challenges.

With removal of subsidy, the government’s intention was to quench Nigerian National Petroleum Company (NNPC) Limited’s age long monopoly of the market as every attempt by successive governments’ policies to liberalize the market failed while prices of fuel were kept within the regulated range.

The PPPRA, now merged with NMDPRA (as a result of Petroleum Industry Act) whose responsibility was to regulate the market, became a toothless bulldog since NNPC was the only player in the sector.

The removal of subsidy raised the hope of oil marketers who had for so many years agitated for full downstream deregulation through a level playing ground with access to forex at the Central Bank of Nigeria (CBN) official rate like NNPC does. The idea really was that with market determined prices, all players in the sector will be able to operate on an even keel.

With enthusiasm, marketers rushed to submit applications for fuel import through the Nigerian Midstream and Downstream Petroleum Regulatory Authority. To date, the Authority has issued a total of 94 importation licenses to oil marketers.

According to the Chief Executive, NMDPRA, Farouk Ahmed, out of the 94 petrol permits, only eight suppliers delivered eight cargoes of PMS totalling 251,000 metric tons within the period June – September 2023 due to devaluation of the naira and high foreign exchange rate.

According to him, “94 wholesale suppliers were issued permits to import PMS into the country. Eight suppliers delivered eight cargoes of PMS totalling 251,000 MT within the period June – September 2023. This low performance was due to the challenge of forex liquidity which has constrained the Oil Marketing Companies’ ability to import the product.”

He, however, said the Federal Government was hopeful that the measures being taken to improve the stability of the harmonized forex market; would help to ensure that more oil marketing companies alongside the Nigerian National Petroleum Company Limited are able to participate in fuel importation. 

Also, just last week, Chief Executive Officer, Northwest Petroleum and Gas Limited, Dame Winifred Akpani, lamented the state of fuel supply in the country, saying that less than 10 percent of the licensed marketers since May, could import due to the stifling Naira exchange rate, leading to a high cost of operations.

Market watchers have expressed optimism that the challenge of fuel importation arising from forex shortage may soon be address with the Minister of Finance and Coordinating Minister of the Economy hinting last week that some 10 billion US dollar would be injected into the economy in the next few weeks.

Silas Olaniyan, a former banker and an Investment analyst posited that the federal government should prioritise fuel importation by the big oil marketers and depot owners once these funds are injected into the economy.

He said: “Nigeria’s economy is fuel powered. The economy runs almost 85 per cent on PMS. If all is well with fuel supply and distribution, all will be well with the economy. It is the reason why the federal gov should prioritise forex supply to oil marketers once the the foreign inflow comes in. It is the right way to go.”

Over the years, access to Forex has been the main albatross to smooth fuel import into the country by the oil marketers, thereby making a mess of every attempt to break the stranglehold of NNPC on the market and ensuring that every half hearted attempt at deregulating the sector came to grief.

Meanwhile, the 21 depots operated by NNPC are not functioning, according to the Independent Petroleum Marketers Association of Nigeria (IPMAN). Industry sources insist that NNPC Limited may not be as liquid, PMS wise, as much as it is claiming. 

A the current selling price of between N595 and N610 per litre in Lagos and between N610 to N620 elsewhere, the contention is that NNPC Limited is not coming clean to Nigerians on the realities of the fuel market regarding pricing and product supply.  Yet, the value of the naira has been steadily sliding downwards, reaching an abysmal low on the parallel market on Friday, October 27, 2023 with one dollar exchanging for N1, 180,  although CBN is steady at N1,025 to a dollar.

The price of crude oil has also been on an upward swing, hovering between $89 to $92 per barrel in one week. This was against average $75.47 in May when the government announced removal of subsidy on petrol. Yet, the pump price of fuel in Nigeria remains the same at N595 and N617. One of the oil marketers stated categorically that, “even if the government provides us with foreign exchange today, nobody is going to be in a hurry to import petrol and sell at that price”.

Recall that between 2010 and 2016, the Depot and Petroleum Products Marketers Association (DAPPMAN) and Major Oil Marketers Association of Nigeria, MOMAN relied on Federal government’sq promise and resorted to massive fuel importation only  to get their fingers burnt as the Federal Government failed to honour its own side of the bargain. At a point, their unpaid subsidy claims and matured Letters of Credit (LCs) arising from the old subsidy regime rose to $2 billion. Of this amount, only 20 marketers were paid

N69 billion after the National Assembly’s intervention three years later. Some of them are still owing to date.

Market watchers contend that the President Bola Ahmed Tinubu government, having demonstrated enough courage by ending the fuel subsidy regime, should walk the talk by ensuring that oil marketers are not put in a dire straits again as this will spell doom for the new policy and indeed the economy. 

Experts reasoned that allowing NNPC to continue as sole importer of fuel into the country has not only returned the country to subsidy regime, but has also weakened the economy.

Already, there is a report that  N169.4 billion was paid as fuel subsidy in August. If that is the case, analysis of data provided by marketers and some industry stakeholders showed that the federal government could be paying as much as N1.68 trillion from September to December as subsidy this year as actual price of PMS and going by international market dictates local price at the pump should be between N890/900 per litre. Nigeria is in the grips of foreign currency shortages, which have seen the naira weaken to record lows on the parallel market. The new Central Bank Governor, Mr Yemi Cardoso had last week said that policymakers faced a nearly $7 billion backlog in foreign exchange demand.

Despite this, the Chief Executive Officer of NNPC Limited, Mele Kyari told energy experts  audience last week that government had not reintroduced a decades-old petrol subsidy scrapped at the end of May, despite concerns from investors of a de facto return as pump prices have not moved since July, despite a more than 30% rise in oil prices. “We are recovering our full cost from the products that we import. No subsidy whatsoever,” he said.

Experts however, warned that returning fuel subsidy at this time will lead to policy somersaults which could have very grave implications for the economy. It is for this reason that they urge the government to spare no efforts in ensuring that right incentives are put in place to bring the oil marketers  back into business and ensure keen competition among all players including NNPC Limited.

Marketers to Resume Fuel Importation Soon, Presidency Sources Reveal

Posted on by Energy and Business Media

Indications emerged last night that the Federal Government is working frantically on measures  aimed at ensuring that oil marketers in the country resume importation of Premium Motor Spirit (PMS), popularly known as Petrol, to achieve seamless storage, supply and distribution of the product across the country.

Following President Bola Ahmed Tinubu’s Inauguration Speech where he announced an end to fuel subsidy regime and total deregulation of the sector, oil marketers had enthusiastically welcomed the development and commenced fuel importation, thereby breaking the monopoly of NNPC Limited as the sole importer of the product.

However as the foreign exchange crisis deepens, throwing Naira off balance, sending the local currency to an all time low of N1000 to a dollar at the parallel market and the rising price of crude oil in the international market, it becomes virtually unsustainable for oil marketers to continue product importation at the current pump price per litre.

Last week, the Group Chief Executive Officer of NNPC Limited,  Mele Kyari, announced that owing to oil marketers’ inability to access foreign exchange, NNPC had once again become the sole importer of petrol.

With Naira on a free fall hitting the N1000 to the dollar mark in the parallel market, and steep rise in crude oil prices, the landing cost of a litre by last week had risen to about N720.

With the current pump price of N620 per litre, industry analysts are in agreement on the fact that it is no longer realistic for the oil marketers to bring in products while retaining the prevailing price, unless the foreign exchange challenge is addressed as a way of bringing down the landing cost.

The Oil Marketers, led by the Chairman of Depots and Petroleum Products Marketers Association of Nigeria, DAPPMAN, Dame Winifred Akpani, along with Major Marketers Association of Nigeria, MOMAN and other marketers Monday met with top officials of Nigerian Midstream and Downstream Petroleum Products Regulatory Agency, NMDPRA, to brainstorm over the challenges being confronted by the oil marketers and how to resolve them.

Impeccable Presidency sources disclosed that the Federal Government was working at a number of short term measures to enable oil marketers access foreign exchange at a rate that will not cause serious dislocation in the price of fuel. 

Said the source: “For strategic reasons, the details of this short term measures will be kept off the public space for now. But rest assured that government is not comfortable with a situation where NNPC will be the sole importer of the product as this will defeat the essence of the deregulation policy of the government.” 

It was also learnt that the Federal Government, as a long term measure, is working on some fiscal and monetary re-engineering that will help to firm up the Naira, going forward.

Said the source: “Of course, it is obvious that the speculative exchange rate of 1000 to a dollar cannot be the actual value of the Naira. A multi-pronged approach is being adopted which will help to firm up the Naira and which, ultimately will enable the marketers to access the dollar at a rate that  will not only be sustainable, but will also be profitable for them to import fuel to ensure seamless supply and distribution throughout the country. NNPC cannot be the sole importer of fuel in a  deregulated market.”

Oil Marketers have consistently called on government to establish a level playing field by giving oil marketers access to foreign exchange at the official CBN window to ensure smooth transactions and create opportunities.

Months back at a Press Conference, Chairman of Depots and Petroleum Products Marketers Association of Nigeria, DAPPMAN, Dame Winifred Akpani, harped on the issue.

She said: “Without a level playing field, especially the one that guarantees access to dollars for all marketers at official rate, marketers’ ability to import petroleum products is continually and severely hampered as significant portion of their operations and critical operational and capital expenses are denominated in US dollars.”

Urging the government to consider the request a most urgent one, the DAPPMAN Chairman said further: “This is a passionate appeal to the government as we can confidently state that accessing foreign exchange rate through the CBN window will significantly enhance capacity and facilitate seamlesss supply of PMS and ultimately birth the regime of sustainability in terms of storage, distribution and supply across the nation.”

“Getting access to foreign exchange at official CBN window and paying for levies, fees in our local currency will markedly transform service levels and spur product availability to a new height across the nation, ” she submitted. 

Sources close to the Monday meeting between the marketers and the federal government as represented by officials of NMDPRA said it was this same position that all the oil marketers in attendance pushed for.

Although the government has come up with a policy of floating the Naira thereby merging the official rate with the parallel one, leaving little margin, in principle, but the market reality is that the gap has continued to get wider by the day as foreign exchange scarcity gets more acute. 

Presidency sources confirmed that the Federal Government will be coming up with initiatives that will address the issue of the foreign exchange frontally in the weeks ahead. 

“The government has noted the request of the marketers. The foreign exchange conundrum is being addressed, even though the issue of crude oil price is not one the government can influence one way or the other. But the oil marketers must be back in business and their Depots must be filled with product.”

NNPC denies dispute with marketers, says subsidy ‘entirely removed’

Posted on by Energy and Business Media

The Nigerian National Petroleum Company (NNPC) Limited says it did not clash with any party over petrol subsidy removal.

Media reports, on Wednesday morning, had said the national oil company clashed with oil marketers over whether the federal government was paying subsidy on petrol or otherwise.

In a terse statement shared with TheCable, the oil firm denied having such a fallout with oil marketers.

“The publication sought confirmation on alleged subsidy reduction, to which NNPC responded that subsidy has been entirely removed,” Olufemi Soneye, NNPC’s chief corporate communications officer, said.

In his inauguration speech in May 2023, President Bola Tinubu had announced that “petrol subsidy is gone”.

However, the full implementation of the policy has been mired in doubts, with the World Bank arguing that the subsidy removal was partial.

But on October 9, 2023, Mele Kyari, NNPC’s group chief executive officer (GCEO), said the federal government was not making any under-recovery payments.

He had also said the national oil company was recovering its full cost from imported products.

“No subsidy whatsoever. We are recovering our full cost from the products that we import. We sell to the market,” Kyari said.

“We understand why marketers are unable to import. We hope that they begin to do so very quickly and these are some of the interventions government is making. There is no subsidy.”

On October 21, 2023, Tinubu had said the removal of subsidy on petrol was imperative to prevent Nigeria’s collapse.

Marketers to Resume Fuel Importation Soon, Presidency Sources Reveal

Posted on by Energy and Business Media

Indications emerged last night that the Federal Government is working frantically on measures  aimed at ensuring that oil marketers in the country resume importation of Premium Motor Spirit (PMS), popularly known as Petrol, to achieve seamless storage, supply and distribution of the product across the country.

Following President Bola Ahmed Tinubu’s Inauguration Speech where he announced an end to fuel subsidy regime and total deregulation of the sector, oil marketers had enthusiastically welcomed the development and commenced fuel importation, thereby breaking the monopoly of NNPC Limited as the sole importer of the product.

However as the foreign exchange crisis deepens, throwing Naira off balance, sending the local currency to an all time low of N1000 to a dollar at the parallel market and the rising price of crude oil in the international market, it becomes virtually unsustainable for oil marketers to continue product importation at the current pump price per litre.

Last week, the Group Chief Executive Officer of NNPC Limited,  Mele Kyari, announced that owing to oil marketers’ inability to access foreign exchange, NNPC had once again become the sole importer of petrol.

With Naira on a free fall hitting the N1000 to the dollar mark in the parallel market, and steep rise in crude oil prices, the landing cost of a litre by last week had risen to about N720.

With the current pump price of N620 per litre, industry analysts are in agreement on the fact that it is no longer realistic for the oil marketers to bring in products while retaining the prevailing price, unless the foreign exchange challenge is addressed as a way of bringing down the landing cost.

The Oil Marketers, led by the Chairman of Depots and Petroleum Products Marketers Association of Nigeria, DAPPMAN, Dame Winifred Akpani, along with Major Marketers Association of Nigeria, MOMAN and other marketers Monday met with top officials of Nigerian Midstream and Downstream Petroleum Products Regulatory Agency, NMDPRA, to brainstorm over the challenges being confronted by the oil marketers and how to resolve them.

Impeccable Presidency sources disclosed that the Federal Government was working at a number of short term measures to enable oil marketers access foreign exchange at a rate that will not cause serious dislocation in the price of fuel. 

Said the source: “For strategic reasons, the details of this short term measures will be kept off the public space for now. But rest assured that government is not comfortable with a situation where NNPC will be the sole importer of the product as this will defeat the essence of the deregulation policy of the government.” 

It was also learnt that the Federal Government, as a long term measure, is working on some fiscal and monetary re-engineering that will help to firm up the Naira, going forward.

Said the source: “Of course, it is obvious that the speculative exchange rate of 1000 to a dollar cannot be the actual value of the Naira. A multi-pronged approach is being adopted which will help to firm up the Naira and which, ultimately will enable the marketers to access the dollar at a rate that  will not only be sustainable, but will also be profitable for them to import fuel to ensure seamless supply and distribution throughout the country. NNPC cannot be the sole importer of fuel in a  deregulated market.”

Oil Marketers have consistently called on government to establish a level playing field by giving oil marketers access to foreign exchange at the official CBN window to ensure smooth transactions and create opportunities.

Months back at a Press Conference, Chairman of Depots and Petroleum Products Marketers Association of Nigeria, DAPPMAN, Dame Winifred Akpani, harped on the issue.

She said: “Without a level playing field, especially the one that guarantees access to dollars for all marketers at official rate, marketers’ ability to import petroleum products is continually and severely hampered as significant portion of their operations and critical operational and capital expenses are denominated in US dollars.”

Urging the government to consider the request a most urgent one, the DAPPMAN Chairman said further: “This is a passionate appeal to the government as we can confidently state that accessing foreign exchange rate through the CBN window will significantly enhance capacity and facilitate seamlesss supply of PMS and ultimately birth the regime of sustainability in terms of storage, distribution and supply across the nation.”

“Getting access to foreign exchange at official CBN window and paying for levies, fees in our local currency will markedly transform service levels and spur product availability to a new height across the nation, ” she submitted. 

Sources close to the Monday meeting between the marketers and the federal government as represented by officials of NMDPRA said it was this same position that all the oil marketers in attendance pushed for.

Although the government has come up with a policy of floating the Naira thereby merging the official rate with the parallel one, leaving little margin, in principle, but the market reality is that the gap has continued to get wider by the day as foreign exchange scarcity gets more acute. 

Presidency sources confirmed that the Federal Government will be coming up with initiatives that will address the issue of the foreign exchange frontally in the weeks ahead. 

“The government has noted the request of the marketers. The foreign exchange conundrum is being addressed, even though the issue of crude oil price is not one the government can influence one way or the other. But the oil marketers must be back in business and their Depots must be filled with product.”