Downstream Operators Decry Unfavorable Pricing Templates At 13th OTL Africa

By Kenneth Jukpor

 

Private operators in Nigeria’s downstream sector have lamented the unfavorable pricing templates in the industry even as they warned that the issue could lead to dwindling private sector investment in the sector.

 

Depots and Petroleum Product Marketers Association of Nigeria (DAPPMAN) made this claim at the recent 13th Oil Trading and Logistics (OTL) Africa Downstream Week which held in Lagos recently.

 

Speaking at the conference, the Vice Chairman of the association, Mrs. Amina Maina noted that the Nigerian National Petroleum Corporation (NNPC) pricing template has posed a threat to other downstream private operators as NNPC sold products below the stipulated prices.

 

This explains the traffic at NNPC retail outlets especially as Premium Motor Spirit (PMS) is sold for N143 per litre at NNPC retail stations while private outlets sell at N145.

 

Amina, who is also the Chief Operating Officer for MRS Holdings, noted that the problem could also restrict the volume of private sector investments needed for the growth in the sector.

 

In his reaction, the Managing Director, NNPC Retail, Sir Billy Okoye opined that NNPC’s lower cost margins was an intentional intervention to ensure Nigerians benefit from its position as the country’s national oil corporation.

 

Okoye asserted that NNPC was the last resort for Nigerians when other private downstream operators had failed or where unable to make products available to the public.

 

Amina had also stated that the biggest challenge to the deployment of technology in the downstream sector was people, explaining that sometimes employees have been unwilling to accept technology out of fears that there jobs might be lost to technological innovation.

 

She explained that when MRS opted to deepen the use of technology it trained the members of staff and relocated some to retail stations as managers while others were retained as freelance marketers, noting that technological advancement wasn’t necessarily an indication for job losses.

 

However, she stressed that the high cost of deploying technology in the downstream sector shouldn’t deter operators from adopting it as it remained a more efficient process of doing business and improving service delivery.

 

In another development, there seems to be a looming traffic congestion  Dangote refinery may begin operations in December 2020 without provision of access roads, railway or pipeline to evacuate products, increasing fears of a possible logistics tragedy which has characterized the Apapa and Tin Can port access roads.

 

Responding to questions from our correspondent on the impending logistics constraints to cargo evacuation from the refinery, the Group Executive Director, Capital Projects and Portfolio Development, Dangote Industries Limited, Mr. Devakumar V. G. Edwin, said that the refinery would utilize shuttle vessels for evacuation of 70% products while the other 30% would be carried via roads.

 

Edwin told MMS Plus that Dangote Group intends to build a road linking Lekki to Epe while he also noted that the Lagos State Government had promised to provide another road connecting Lekki that would be tolled.

 

With Dangote refinery scheduled to begin operations next year, stakeholders have expressed worry as neither the road by Dangote nor the Lagos State Government road, has begun construction; yet the refinery edges closer to completing mechanical construction.