Petrol Price Hike: Marketers Willing To Sell At N970
The Independent Petroleum Marketers Association of Nigeria has threatened to stop operations nationwide following the high cost of Premium Motor Spirit, popularly known as petrol, sold to IPMAN members by the Nigerian National Petroleum Company Limited.
IPMAN revealed on Thursday that the cost of petrol from the Dangote Petroleum Refinery to NNPC was about N898/litre, but noted that NNPC was selling the same product to independent marketers at N1,010/litre in Lagos.
The association, which controls over 70 per cent of filling stations nationwide, kicked against this and threatened to down tools, as it also demanded a refund from NNPC for earlier petrol supply payments made by its members. This development may further worsen the petrol scarcity and queues in many parts of the country.
It was also gathered on Thursday that members of the Major Energies Marketers Association of Nigeria were still loading subsidised petrol from Dangote refinery, based on earlier arrangements with NNPC.
Speaking on Thursday, the National Publicity Secretary of IPMAN, Chinedu Ukadike, said the association may be forced to take action if the challenge between IPMAN and NNPC is not resolved immediately.
This development followed an earlier revelation by IPMAN national president, Abubakar Maigandi, that NNPC was asking independent marketers to buy petroleum products from its depot at N1,010/litre in Lagos State.
Maigandi, who spoke during a live television interview on Thursday, argued that the price was higher than what NNPC paid for the product from the Dangote refinery.
He also noted that independent marketers’ funds had been held by the national oil company for about three months.
According to him, NNPC purchased the product from the refinery at N898/litre but is asking marketers to buy it at N1,010/litre in Lagos; N1,045 in Calabar; N1,050 in Port Harcourt; and N1,040 in Warri.
“Our major challenge now is that independent marketers have an outstanding debt from the NNPC and the company collected products through Dangote at a lower rate, which is not up to N900, but they are telling us now to buy this product from them at the price of N1,010/litre in Lagos; N1,045 in Calabar; N1,050 in Port-Harcourt; and N1,040 in Warri”, Maigandi stated.
He also pointed out that the association’s funds with NNPC had reached N15bn, stressing that marketers were eager to be fully involved in the petrol business and its components following the full deregulation of the sector.
He added, “Marketers want to be fully engaged in the business of petrol and its components. NNPC has been the one bringing in the product and loading and has an off-take in the Dangote refinery.
“We are now being allowed to import and there is no challenge on that issue. What we are after is to get the product directly from Dangote and not through NNPC. Currently, they owe us up to N15bn.”
On Wednesday, the retail stations of NNPC raised the price of petrol to N1,030 from N897/litre in Abuja, and in Lagos it was hiked to N998/litre from N868/litre. Other locations witnessed similar price hikes, a development that triggered anger among Nigerians.
The price hike, the second in one month, represents about 14.8 per cent or N133 rise. However, the Nigeria Labour Congress and the Organised Private Sector called for the immediate reversal of the hike in the pump prices.
With the latest price adjustment, it means that in the less than 17 months of the current administration, the price of petrol has risen by over 430 per cent from May 29, when it took over the reins of power.
Asked if NNPC had reached out to resolve the issue with independent marketers, the National Publicity Secretary of IPMAN, Ukadike, responded in the negative.
He said the oil company had not provided any feedback or response following its last discussion with the marketers.
Ukadike said, “No changes or feedback at all. NNPC hasn’t responded to us. They haven’t returned our money. We are still observing what the situation would turn to since they haven’t reached out to us, or probably we would have to withdraw our services if the issue is not resolved.”
He, however, noted that efforts to reach Dangote for direct loading were in progress and a meeting between both parties expected to hold soon.
The IPMAN official added, “Any moment from now, Dangote will invite us, from the fillers we have received.”
On its pricing, he said, “If we start buying from Dangote at its current price, we will sell at N970, lower than the price of NNPC. Dangote sold to NNPCL at N898/litre. But they are asking us to buy from them at their pump price, can you imagine this kind of slavery? We continue to talk about price disparity every day and it’s there for all Nigerians to see.”
Phone calls and messages to NNPC officials to respond to the position of IPMAN were not replied as of the time of filing this report.
Similarly, officials at the Dangote refinery did not respond to enquiries when contacted for their views on the issues raised by IPMAN.
On the contrary, the Major Energies Marketers Association of Nigeria said it is not owed by NNPC, as it owns a large stock of storage systems to mitigate against sudden changes in petrol prices.
The Executive Secretary, MEMAN, Clement Isong, in a telephone interview, attributed this situation to its continuing relationship with NNPC.
He said, “We have storage tanks, unlike other oil marketers that only have trucks to transport directly to their filling stations. MEMAN is integrated. We have storage tanks, trucks and we have filling stations. So, we have products that we have bought into our storage tanks, which is a big difference from people who buy and take them straight to the station. They don’t have additional storage. We have depots and it takes a little bit longer for us to run out of stock, so we don’t face the challenge of being owed by the NNPC.
“We have a continuing relationship with NNPC and it is not the first time prices have gone up or down. That relationship means that when prices go up or down, we adjust. And so they continue to supply us. Everybody will charge its price according to its business strategy to optimise costs.”
This came as a major oil marketer revealed that members of the group were still loading subsidised petrol from Dangote refinery, which they had earlier paid for through NNPC.
Major marketers had announced that NNPC sold petrol to them at N766/litre when it started lifting the product from Dangote refinery. Due to the capacity of the major marketers to buy the product in large volumes, they paid for the commodity massively and are still loading it from the Lekki-based refinery.
“The loading of this product may continue till the next two weeks before it will be exhausted and we will now start buying directly from Dangote without going through NNPC again,” a major dealer told one of our correspondents.
When another dealer was asked if major marketers had started lifting petrol directly from Dangote refinery, he replied, “I know the opportunity is open, but I cannot confirm if anyone has started yet. The one we are still lifting is the one we bought under NNPC.”
The dealer provided further explanation on the new petrol pricing regime in Nigeria, saying, “I believe the price of PMS has finally been deregulated, and subsidy has finally been eliminated. Henceforth, the price of PMS will be determined by market dynamics. This is inevitable as the government could no longer bear the burden of the subsidy.
“A good measure the government has taken to mitigate the development is the sale of crude oil to local refineries in naira at a fixed exchange rate. This will protect consumers from the negative impact of the fluctuations in exchange rates. The fact that the crude will be refined in local refineries will also save the cost of transporting crude to offshore refineries and transporting refined products back to Nigeria. Without these two factors, prices would have been higher.
“Another thing will be that the incentive to smuggle petrol from Nigeria to our neighbouring countries will be greatly reduced. Henceforth, prices can change at any time, depending on market dynamics. Customers will make informed choices about where to buy from. Operators will need to improve on safety, customer service, and accurate measurement to retain customers. This is also the time for consumers to consider alternative sources of powering their vehicles like CNG.
“The era of full competition has come to Nigeria. With time, things will settle down, and people will make informed choices. The government should invest in mass transportation, especially with CNG buses. Greater incentives should be given in terms of duty waivers on conversion kits and other CNG equipment and vehicles.”
Meanwhile, the landing cost of petrol has dropped to N975.89/litre, according to the latest data released by the Major Energies Marketers Association of Nigeria.
Crude oil prices and foreign exchange rates are the major factors determining the cost of refined petroleum products, including petrol, diesel, aviation fuel, and kerosene.
On Thursday, Brent crude futures settled at $77.41 a barrel, falling 60 cents, or 0.8 per cent. US West Texas Intermediate futures settled down 33 cents or 0.5 per cent, at $73.24 a barrel.
The decrease in the landing price is supposed to lead to a corresponding reduction in pump prices at filling stations across the country pending the cost of transportation, storage, and distribution.
MEMAN data also revealed that the landing cost of Automative Gas Oil, also known as diesel stood at N1,076.35/litre, while that of Aviation Turbine Kerosene (ATK), known as aviation fuel stood at N1,111.97/litre.
Filling stations in the Federal Capital Territory sold between N1,025 and N1,120 in different locations.
Total Energies, located at Sultan Abubakar Way, Zone 3, sold the product for N1,080. Eterna filling station at Obafemi Awolowo Way, Utako, sold at N1,120. Shafa filling station, located along Airport Road, sold at N1,050 while, NIPCO and Mobil fuel stations, both located along Airport Road, also sold the product at N1,025 per litre.
This development followed NNPC’s decision to terminate its exclusive purchase agreement with Dangote Refinery.
In light of the recent fuel price hike, concerns are mounting over its potential impact on Nigeria’s economy.
An Associate Professor at the University of Africa, Balyesa State, Dr. Onuche Unekwu, said, “As prices rise, demand will fall, leading to increased unemployment rates. This is a concerning cycle that can ensnare many households.”
He emphasised the ripple effects of the fuel hike, noting, “People and businesses will become increasingly burdened. The rising costs are not just about fuel; they also frustrate production processes across various sectors.
“If the current trend continues, we could see millions more Nigerians facing poverty as essential goods and services become less accessible.”
Regarding the impact on small businesses, he expressed grave concerns.
“Many small enterprises operate on thin margins. With the higher costs of doing business, we risk seeing a significant number of them collapse, which could exacerbate unemployment and economic instability.”
Unekwu’s insight underscores a challenging road ahead for Nigerians as they navigate the complexities of rising costs and their implications for individuals and businesses.
An accountability expert at the Centre for Fiscal Transparency and Public Integrity Victor Agi said, “It has been a tragedy that when there is a hike in fuel prices, everything else automatically skyrockets. This situation will not be different. We have seen how the prices of fuel have moved from N650 to N700, depending on the location, and now to over N1,000, the official price set by the NNPC.
He added, “Inflation figures have also risen as a result of this hike. If the prices of commodities begin to rise, they will also affect the prices of raw materials for small and medium enterprises. The purchasing power of individuals will be impacted as well.”
Agi warned that these changes would have a ripple effect on the economy. “More and more people will be unable to meet their needs. If you’re buying a cup of gari in Abuja for, say, 1,300 to 1,500 naira, this increase in fuel prices could push it to 1,700 naira, depending on market reactions.”
He stated, “One of the things that affect prices in the country is transportation costs. An increase in fuel prices will lead to higher transportation and production costs, which will eventually reflect in the prices of goods in the market.”
Agi also addressed the impact on small and medium enterprises.
“If there’s an increase in transportation and raw material costs, it will affect their businesses. If they lack sufficient funds, they may not be able to continue operations or will stagnate due to inadequate resources.
“Small and medium enterprises will eventually have to adjust to the new prices, and ordinary people will suffer as a result.”
He suggested that businesses sought alternative energy sources.
“The over-reliance on PMS as an energy source has not benefited small and medium-scale enterprises in Nigeria. For instance, a barbershop that relies on a generator finds it increasingly unsustainable due to fuel costs,” he said.
“Businesses should consider alternative energy sources, such as solar power, although it’s not cheap. Many small enterprises find themselves in a dilemma, having to choose between electricity, generator fuel, and solar.”
Regarding government intervention, Agi expressed skepticism, saying, “Honestly, we no longer trust the government to mitigate these risks. In the past, we trusted that removing the fuel subsidy would lead to better allocation of resources, but little has changed.
