FG moves to avert NNPC monopoly of fuel importation

October 12, 2023

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.Targets favourable foreign exchange rates to bring back oil marketers

Oil marketers will soon resume importation of Premium Motor Spirit, (PMS), popularly known as petrol into Nigeria as the Federal government moves to quince NNPC’s monopoly of importation.

This sequel to a meeting the marketers: Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN) and Major Marketers Association of Nigeria (MOMAN) had with top officials of Nigerian Midstream and Downstream Petroleum Products Regulatory Agency, (NMDPRA) early this week.

Long queues have returned to some states in the country with a litre of fuel risen to between N620 to N650.

Just Last week, the Group Chief Executive Officer of the Nigerian National Petroleum Company (NNPC) Limited, Mele Kyari had lamented the inability of oil marketers to import fuel due to their inability to access foreign exchange, leading to the company becoming the sole importer of petrol once again.

With current exchange rate of N1,000 per dollar, rise in crude oil price in the international market, currently hovering around $92 per barrel, the landing cost of a litre as at last week had risen to about N720 per litre

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This, it was learnt had caused the marketers to withdraw totally from fuel import, leaving NNPC, the state owned company into it despite the marketers’ enthusiasm to return to the market following Tinubu’s inauguration speech where he announced an end to fuel subsidy regime and total deregulation of the sector on May 29, 2023.

It was further gathered that the Federal Government is working at a number of short term measures to enable the oil marketers’ access to foreign exchange at a rate that will not cause serious dislocation in the price of fuel.

“For strategic reasons, the details of this short term measures will be kept off the public space for now. But rest assured that government is not comfortable with a situation where NNPC will be the sole importer of the product as this will defeat the essence of the deregulation policy of the government.”

It was also learnt that the Federal Government, as a long term measure, is working on some fiscal and monetary re-engineering that will help to firm up the Naira, going forward.

“Of course, it is obvious that the speculative exchange rate of 1000 to a dollar cannot be the actual value of the Naira. A multi-pronged approach is being adopted which will help to firm up the Naira and which, ultimately will enable the marketers to access the dollar at a rate that will not only be sustainable, but will also be profitable for them to import fuel to ensure seamless supply and distribution throughout the country. NNPC cannot be the sole importer of fuel in a deregulated market.”

Oil Marketers have consistently called on government to establish a level playing field by giving oil marketers access to foreign exchange at the official CBN window to ensure smooth transactions and create opportunities

With the current pump price of N620 per litre, industry analysts are in agreement on the fact that it is no longer realistic for the oil marketers to bring in products while retaining the prevailing price, unless the foreign exchange challenge is addressed as a way of bringing down the landing cost.

Also recalled that as part of measures to dose volatility of exchange market, the CBN had floated single exchange market. The CBN had merged the official rate with the parallel one, leaving little margin, in principle, but the market reality is that the Despite this, the gap has continued to get wider by the day as foreign exchange scarcity gets more acute.

DAPPMAN Chairman, Dame Winifred Akpani, had lamented, saying that without a level playing field, especially the one that guarantees access to dollars for all marketers at official rate, marketers’ ability to import petroleum products is continually and severely hampered as significant portion of their operations and critical operational and capital expenses are denominated in US dollars, urging the government to consider the request a most urgent one.

“This is a passionate appeal to the government as we can confidently state that accessing foreign exchange rate through the CBN window will significantly enhance capacity and facilitate seamless supply of PMS and ultimately birth the regime of sustainability in terms of storage, distribution and supply across the nation. Getting access to foreign exchange at official CBN window and paying for levies, fees in our local currency will markedly transform service levels and spur product availability to a new height across the nation, ” she said.