Last week, two major incidents rocked the Nigerian oil and gas sector as the price of Premium Motor Spirit (PMS) popularly known as petrol was increased for the second in about two months and the milestome importation of 27m liters of petrol by Emadeb Energy Services Limited to become the first private company to achieve such feat in the country.
In this interview on Arise TV News monitored by MMS Plus, the President of the Independent Petroleum Marketers Association of Nigeria, Chinedu Okoronkwo explained what was responsible for the hike, factors that will guide against such an increase in the future and sundry issues. Excerpts.
We Saw The Jump Of The Price Of Petrol From N198 To Over N500 Per Litre And An Average Of Between N568 In Lagos And Over N600 In The FCT And Other States, What Is The Reason Behind This? What Has Led To This Increase?
Well, as you know that this business is done with dollar. Remember, the rate of dollar now is in one window. It’s not when you have maybe, CBN will be giving official rate of N400 or something and the black market will be something in the region of N700.
But today as I speak, it’s over N800 and again, there is no more second window. And in a deregulated regime, what determines the price of anything is the cost.
This product is not refined here. Everything is imported. And you see the volatility is there. But if moving forward, we want to achieve something, there are other alternatives which we have provided, the Compressed Natural Gas (CNG). I think that is the only breather that this nation needs to vigorously look into. By the time we pursue that aspect of energy mix, it will be a matter of choice if you want to use petrol, if you want to use gas, but that area has to be developed.
Yes, the price has really gone up because of the fundamentals in the market. The whole thing is under dollar. It’s under dollar parity anyway.
Duly noted about the need for the CNG area to be developed, but when it comes to other reasons that were suggested for this increase,
Apart From What You Mentioned About The Dollar, The Other Factor Is The Increase In Crude Oil Prices In The International Market And The Third Applies To Some States In Nigeria, Specifically In The North Where The Transportation Costs When It Comes To Transportation Of Fuel Would Also Cause An Increase. So, Do You See These As Also Cogent Or Tangible Reasons For This Hike In Price?
I think transport might not be the issue basically because you must get the price at the time at the depot. What is the depot going for? Then you begin to add up other variables that will bring the escalation of the price.
Putting the northern market, yes, because of the transport, it will go up. Even in the southern market, it’s not there, it’s also up. So those factors must also come into reckoning. And I believe this is why every effort must be geared towards bringing alternative. That alternative is key.
By the time we transit into that CNG, I mean a lot of people using CNG now like in Benin, they are not complaining. They are having their gas; they are having their petroleum product. So, it’s expected that in a market that is not regulated, you see this volatility anyway. It might go up, it might go down, like any other commodity.
Talking About The Chances That The Fuel Pump Prices Are Likely To Come Down And Looking At The Pump Prices Depending On The Market Forces, I Remember The Group Chief Executive Officer, Mr.Mele Kyari, That’s Of The Nigerian National Petroleum Company Limited Had Said That The Fuel Pump Prices In The Country Are Reflective Of The Current Market Price Of The Commodity, Looking At The Market Pricing And The Body Language, Are We Looking At Any Chances That This Fuel Pricing Could Go Down?
Remember that this in itself is going to take a toll on Nigerians, an immediate toll, an immediate effect on how Nigerians are going to plan transportation and moving around.
So, we’re just looking at the market. Is there any indication at all that this might come down soon? It all depends on if the OPEC will increase their pump out to the market. You know Saudi Arabia removed about a million barrels. This is also one of those factors that we think have really contributed to this price hike.
And like you said, the price of Brent will also play a part. In any commodity, the chances are that it might go up or it will go down. But what is needed here now for us is for us to have an alternative. And that alternative is in CNG for now. There could be other energy mix that will help this country.
Regarding the CNG aspect, About A Month Ago, We Heard News About The President Putting In Place A Structural Approach To Make Available Cheap Fuel Through CNG And Also LNG To Mitigate The Effects Of The Subsidy Removal On Nigerians. Are You Contented With The Pace At Which This Administration Is Going In Terms Of Providing Alternatives?
I think we were given eight weeks when they met with the committee. That eight week is still on and they are meeting. Maybe at the end of the eight weeks, they will come out with a plan. But I think that plan should be robust in a way that workers and commuters will begin to have this thing.
We have a lot of plans in our own and especially the independent marketers on how to deploy, co-locate this CNG with our filling stations. And we’ve started the data collection and pretty soon we’ll know the number because you have to create the market. That is what’s needed. Gas business is not like petroleum business where you just go and carry. You must assure those IOCs that there is market by the time they give you,
And that you will come again for them to develop their infrastructure.
That infrastructure is needed. And they need assurance that the market is also going towards that direction. That is why you see a lot of areas is being delayed. But there is no market. But with a country with over 200 million people, by the time that market is diluted, we will also have a lot of breather.
There will be calls for us to do business. A lot of things are really suffering now. You just wake up, you see the price have changed because we are not controlling this thing. And again, the refineries must also begin to work. Thank God, Dangote Refinery said he’s going to start running by August. Pretty soon we’ll get into August. Let’s hope that it will work with the CNG and all these other refineries coming up. We still have reason to say it’s not the end of the tunnel yet.
Okay, In Light Of The Fluctuating Crude Oil Prices, As You’ve Alluded To, Of Course, The International Market And The Exchange Rate Challenges, Are There Any Strategies That The Independent Petroleum Marketers Association of Nigeria Can Adopt To Ensure That These Pump Prices Remain Affordable And Reflect The Current Market Conditions, More Importantly, Collaborating With Its Members And Petroleum Marketers Across The Country To Ensure Transparency In Pricing And Preventing An Arbitrary Price Increase? Because We Do Know That There Have Been Certain Marketers That Have Taken Advantage Of The Slight Increase And Even Selling Fuel That They Already Had In Stock That They Bought For A Cheaper Amount And Starting To Sell It For This New Price Increase. Is There Anything That Is Being Done To Make Sure That People Don’t Take Advantage Of That Loophole?
Okay, nobody would like to keep his product because you borrow money from the bank, you do a lot of other exigencies. But I think the idea we are trying to profile is that some of these extortion in the depot must stop, especially now that the business is deregulated,
A situation where the tanker drivers will tell you to pay extra money on the cost for which you are, that is, if you look at some of this from last week, we have alerted the government, the need for people to allow this business to flow without injecting additional brunt to the public. Our business is highly competitive, you can’t put your price maybe high and others are selling low and still be in business.
The only thing is for you to follow what the price is even selling. For my members, we are even ready to sell below what the NNPCL price is.
The reason is that our overhead is not like that of an NNPC, if they are selling maybe N511, my members last regime before this increase, we are even selling below.
I think the government has to help us check the system in the refineries, in the depots, everywhere this product is gotten, let there be no additional extortion from both major independent and depot owners. That way, the price will not be rising like now. Additional cost to this will also not be very good for my members and the public.
What’s Your Thought On The Proposed Cash Transfer Palliatives To Poor Nigerian?
Well, I think there are levels of life in this country. There are those that will work with that 8,000 Naira. (This interview was conducted before the new palliatives measure was rolled out by NEC) But the large population, to me, that 8,000 Naira will not go anywhere. Why not we think of putting something that will help them come out of their poverty, create other values, aids.
You can apply it in the area of agriculture. You can also put it in making buses available. That way, it will go a long way in reducing because 8,000 Naira of today is not something you can bank on, hit your hand on the table and say it will do anything.
Government idea is how to reduce poverty, how to bring people joy and smile to their faces again. But I think this money collectively could be used in something mega and bigger that will produce wealth or create wealth and make life much, much better moving forward.
What Role Do You See IPMAN Itself Playing In Promoting Energy Diversification And, Of Course, Encouraging The Development Of Sustainable And Affordable Energy Solutions To Reduce Nigeria’s Dependency On Petrol And, Of Course, Alleviate The Burden Of Price Fluctuations On The Nigerian Population?
Yeah, you know that before now we have had people using CNG. But IPMAN, in our study, we reviewed that this is the only energy that can help this country at a time like this. And that is why we have decided to co-locate it in our very own filling station across all the nooks and crannies of this country.
By the time we deploy this energy, life will come back again because people will not suffer. This gas is here. CNG and LNG is here in Nigeria. We’re not going to import it. We’re even flaring it. So for us, we’re also doing something that will bring a serious unleashing of wealth to this country and bring it back to life again because things are beginning to get hard.
But I think by the time we roll out properly, we’ll be addressing this issue of energy problem. We certainly hope that will be the case.