Tackle FG On Pricing of Petroleum Products Comments Feed

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Tackle FG On Pricing of
Petroleum Products Comments Feed

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Some key stakeholders and players in the oil industry may soon be engaging the Federal Government on the recent developments in the industry especially as it relates to the recent sudden increase in the pump price of petroleum products in the country.

The Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, and the Petroleum Products Retail Outlets
Association of Nigeria, PETROAN for
instance are uncomfortable with the
development. They complained of lack of
consultation by the relevant government
agencies before announcing the price hike
and have resolved to engage the federal
government on the issue.
Appearing on Friday’s edition of the
Channels Television breakfast programme,
Sunrise Daily, the leadership of both the
PENGASSAN and PETRAON faulted the
position of the government on the removal
of subsidy and deregulation. Timipre Sylva,
minister of state for petroleum, had stated
that “this country cannot at this time
continue to afford this subsidy” noting that the country is spending over a trillion on subsidy every year. According to Sylva, “We decided that it was time to deregulate. What that meant was that government stood back from the business of importing and supplying products at the pump. We are no longer fixing prices, that’s what deregulation means… We have stepped back and we are allowing market forces to determine the price at the pump”.
But the President of PEROAN, Dr. Billy Gillis- Harry disagreed with the minister. A visibly agitated Gillis-Harry stated vehemently that “It is not the market forces that are
determining the prices now. I beg to disagree with the Honourable minister. In my view, an ex-depot price was fixed yesterday.(Thursday). We had a letter written to some.of our members at N151.65 only three days
ago. Just yesterday, they now changed the
price again to N147.67. So, tell me, who
discussed that? Was it the market forces that determined that? Who are the market
forces? I, as the national president, I
represent over two hundred and something retail outlets in this country. IPMAN is there that should be representing marketers;
MOMAN is there representing major
marketers. DAPMAN is there representing
the depot marketers. Which of us made
inputs into this new pricing of N147.67? The answer is that I don’t think anyone of us was”.
Some key stakeholders and players in the oil
industry may soon be engaging the Federal Government on the recent developments in the industry especially as it relates to the recent sudden increase in the pump price of petroleum products in the country. The Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, and the Petroleum Products Retail Outlets
Association of Nigeria, PETROAN for
instance are uncomfortable with the
development. They complained of lack of
consultation by the relevant government
agencies before announcing the price hike
and have resolved to engage the federal
government on the issue.
Appearing on Friday’s edition of the
Channels Television breakfast programme,
Sunrise Daily, the leadership of both the
PENGASSAN and PETRAON faulted the
position of the government on the removal
of subsidy and deregulation. Timipre Sylva,
minister of state for petroleum, had stated
that “this country cannot at this time
continue to afford this subsidy” noting that
the country is spending over a trillion on
subsidy every year. According to Sylva, “We
decided that it was time to deregulate. What
that meant was that government stood back
from the business of importing and
supplying products at the pump. We are no
longer fixing prices, that’s what deregulation
means… We have stepped back and we are
allowing market forces to determine the
price at the pump”.
According to him, “We heard about
deregulation almost four months ago and
can we say what we are seeing now is
subsidy removal and deregulation? We also
think that these are things that affect the
ordinary Nigerian. So, it’s very critical that
we must have a very transparent, honest
discussion on this to look at all the variables
– the inputs that should determine what the
pricing and whatever that should be made
known to the ordinary Nigerian. And we
should not deliberately be fixing prices
because it seems to me like the government
today is operating from a private sector
business man’s mind that is not seen and
that is very critical to address”.
Concerned about frequent changes in fuel
prices, Gillis-Harry said what they would
expect to see in such a dialogue would be
“what parameters were deployed in
computing what the prices should be in a
particular segment. And we should not be
changing prices every month; it is not good
for business. It does not allow for good
planning. So, we need to be certain. What
exactly are we doing? You heard the
honourable minister say that they are
removing their hands from importation and
they want the market forces to determine
the price. Those are some of the key
elements that a stakeholders meeting should
be able to discuss”.
Expressing the frustrations of his members,
the PETROAN President stated that “The
retail outlet, as you know, is the most critical
in the petroleum distribution chain. We are
the last man, and we are the most critical.
Without us, there is actually nothing that
could happen from crude oil exploration,
down to this point. Your question is simple;
were you consulted? The answer is no; we
were not consulted. And we have written
severally to the Federal Government
through the minister to the PPRA to the GMD
to the MD of PPMC that it is important to
engage the real sector players.
“The real sector players would be MOMAN,
IPMAN, DAPMAN, PETROAN, and relevant
labour organizations. We have written
severally that there is the need for a
stakeholder meeting to review this. The
government on itself cannot sit back on an
armchair economic projection and put
pricing that is going to affect a majority of
Nigerians very adversely. Now, yesterday,
you bought products at N145; today, you are
going to buy product at the ex-depot price
for N147.67k. Tell me, how is the marketer
going to sell to get his return on
investments? Minimum you will put it
would be about N160, N162, or even N170.
Who is going to bear the brunt? The
Nigerian people! The Nigerian people are,
just like the labour leader has just said, are
already having problems because their
pockets are crushed; they do not have the
deep pocket to…”
Responding to why filling station owners
were always quick to reflect new pump
price increases while reluctant to adjust
their metres when prices were reduced,
Gillis-Harry said “It’s a simple case of a
businessman’s hunger for profit”. He
explained that “If petroleum prices were
reduced today, of course the man who
bought the product from ex-depot price at
say N138.30k as it was just a few hours ago,
will certainly not sell below his buying price.
So, he has to try as much as he can to sell off
as much as possible before he can buy, and
which is justifiable in business.
“But if the prices go up, of
course it is instant, For
instance, prior to yesterday,
the information was that we
were going to buy product at
N151.61k and most of us have
already gone to the bank to
start making negotiations for
that kind of loan. Now,
yesterday, in Port Harcourt at
the refinery, we got a reprieve
that the product is going to be
sold at N147. 67k, and luckily,
in Mosimi, the same thing; I
tried to get Suleja and the rest
of the depots so as also to
know what they bought
between yesterday and today.
“But obviously, it looks like the price is now
flat at N147.67k. Now, why is that so? If this
man now has to go back and look for
additional nine or N10 per litre to buy a
tanker of say 30,000 litres, that is additional
N300,000. The banks will charge; he’s going
to get the money somehow. If he’s selling at
a loss, then he can never buy petroleum
products again to sell at the retail outlet. It’s
important that as Nigerians, we need to
know that my members who are in
hundreds of thousands across the country
will always want to serve Nigeria in the best
of our ability”.
Gillis-Harry insisted that “One of the ways
we can do that is by understanding exactly
the price mechanism that the PPRA, the
PPMC and NNPC compute their prices”
stressing that “If at this time they are not
able to take us into confidence, let us know
this is what we are doing; this is how we
want to do it, and then share market
intelligence and information with us, it will
not be right to…I can tell you it will get to a
point where retail outlets will say sorry, we
don’t have money to buy petroleum
products so we are no longer interested in
this business”.
He however argued that the issue was not
about lowering of prices but “about a
righting of price” adding: “When price is
right, you give adequate information to the
buying public. It is the size of the pocket of
the ordinary Nigerian that should be
considered when most things are being done
because you do not expect somebody who is
farming in the suburbs in the villages that
lives in Abeokuta to trek down to his farm
and then come back; he must have to use a
truck or something to be able to be highly
productive. So, what would be required in
the dialogue would be absolute truth and
transparency in information sharing”.
Also aligning with his PETROAN
counterpart, Festus Osifo, PENGASSAN
president, said “For me, and for us in
PENGASSAN, we think that in the next few
days, we will be working closely with our
umbrella body, the Trade Union Congress, to
effectively engage the government because
what is even happening today is not actually
subsidy removal. When you remove subsidy
totally then the price, you could buy
petroleum products in Lagos may be a bit
different from the price that you could buy
in Calabar. Yes, I understand the need for
stabilisation and equalisation of prices, but
we think that in the next few days, we would
be engaging the government, engaging all
stakeholders. Let us come to the table, let’s
bring all the facts to the table; what are the
points, how did you arrive at the cost. And
moving forward, what is going to be the
trend; not a situation whereby the
marketers, the consumers wake up on a
daily basis and you keep seeing increment in
prices”.
Like Gillis-Harry, he did not agree that the
industry is deregulated. Osifo posited that
“The fact that the price is being fixed, there
is a kind of semi-regulation at the end of the
day…It is still a semi-regulated
environment”.
Asked how the Dangote
Refinery would impact on the
prices of petroleum products,
Osifo said it is expected pump
prices would reduce.
According to him, “because of
the fact that part of the cost
drivers of the Dangote
Refinery is going to be in
Naira, then, we are actually
expecting the pump price to
reduce. He was however quick
to warn that “government
should not just fold its arm;
the organised labour should
not just fold their arm, and
wait for Dangote Refinery to
come in. What is happening to
our existing refineries, the
question must be asked and
solution must be proffered”.


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