How illegal refineries’ closure worsened diesel scarcity –Marketers

How illegal refineries’ closure worsened diesel scarcity –Marketers
Illegal refinery

• Declare state of emergency on refineries, IPMAN tells Buhari

The recent massive clampdown and destruction of illegal refineries also contributed to the seeming scarcity and hike in the price of Automotive Gas Oil, popularly called diesel, in Nigeria, oil marketers stated on Friday.

It was gathered that before the clampdown on the illegal refineries, the facilities were producing diesel in manageable volumes for the market, as this reduced the cost of locally produced diesel when compared to the imported product.

This came as the Independent Petroleum Marketers Association of Nigeria called on the President, Major General Muhammadu Buhari (retd.), to declare a state of emergency on Nigeria’s three refineries under the management of the Nigerian National Petroleum Company Limited.

The National Public Relations Officer, IPMAN, Chief Ukadike Chinedu, told our correspondent that another reason for the high cost of diesel, which was over N655/litre on Friday, was because the commodity was no more refined in manageable volumes in Nigeria.

He said, “Diesel, kerosene and aviation fuel have been deregulated for a long time and since then the products are imported into the country. And in as much as there is importation, the landing cost is being influenced by the foreign exchange rate.

“Based on the freight, vessel rate, product cost and forex, diesel should be sold in Nigeria at between N500 to N600/litre. But because there was local refining of diesel by some illegal refiners who were involved in bunkering, they were able to refine diesel locally and sold it at between N200 to N300/litre.

“This made diesel not be lucrative for those who were importing the product because they will sell at a loss. And most companies and individual houses were finding a way to use the locally refined diesel.”

Ukadike added, “But when the Federal Government declared war on illegal refineries in conjunction with the governor of Rivers State and some other governors, they slowed down the production of locally refined diesel. So most diesel users we left with no choice but to buy the imported ones.

“So what is happening now is that the demand for imported diesel is becoming heavier and importation has been less due to the rising price of crude oil and the instability of forex.”

On the current cost of diesel, Ukadike stated that “it is around N655/litre and above and it is possible for this price to increase as far as the dollar continues to rise against the naira since we’ve seen a drop in crude oil price for about two days now.”

Ukadike urged the President to declare a state of emergency on Nigeria’s refineries “so that they will come back to life.”

He added, “With that, the government will be able to checkmate this continuous rise in the prices of deregulated petroleum products. Also, the war in Ukraine is affecting the importation of petroleum products in this country.”

The IPMAN PRO stated that the current situation showed that the illegal refiners were producing a manageable volume of diesel, but stressed that their activities caused environmental hazards, which was why they had to be closed.

“The environmental hazard from the illegal refineries and the procurement of crude oil illegally through pipeline vandalism was not good for the economy,” he stated.

He added, “But the appeal is that the Federal Government through the Niger Delta ministry, should look into bringing in equipment and foreign partners who would open modular refineries to start production.

“This is because once the product is produced locally, its cost will not be on a steady rise as we have seen in the past few weeks.”

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