BY Sesan Shomefun
The recent calls by Governors of the 36 states urging the Nigerian National Petroleum Company Limited (NNPCL) to halt further importation of Premium Motor Spirit (PMS) also known as petrol into the country can best be described as a poor judgement of the workings of the oil industry, particularly the downstream sector.
According to them, it is shameful that despite being a member of the Organisation of Petroleum Exporting Countries (OPEC), Nigeria still imports petrol.
Chairman of the Progressive Governors Forum (PGF) and Imo State Governor, Hope Uzodinma, said this while briefing newsmen after their meeting in Abuja last Wednesday. The governors had invited the Group Chief Executive Officer of NNPCL, Mele Kyari, to brief them on measures being taken to resolve issues regarding accessibility and affordability of petroleum products to alleviate the suffering of Nigerians.
Uzodinma said: “We must encourage the homegrown solution that the President just introduced ; encouraging Dangote Refinery. We should repair our Port Harcourt Refinery, repair our Warri Refinery, repair our Kaduna Refinery, and then produce what we eat and eat what we produce.
“We shouldn’t rely on importation of crude oil. For me, it is an aberration in the first place, to rely on importation of petroleum products as an oil producing country, while other members of OPEC of our status are now refining crude oil in their countries.”
However, going by his submission, one would have expected a politically exposed person of Governor Uzodimma’s caliber to have a better understanding of the workings of the petroleum industry and possibly enlighten his fellow governors being a second term governor and former senator representing Imo West senatorial district before assuming office as Governor of Imo State on January 5, 2020 and his subsequent re-election for his second and final term in November 2023.
As much as the governors and other emergency advocates of ‘zero’ fuel importation policy may want it to take effect, the fact, however, remains that no one individual can stop fuel importation by fiat.
Recall that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) had in June this year said the deregulation of the downstream sector allows marketers to source products from anywhere, whether locally refined or imported from outside the country. The Authority emphasized that marketers have the freedom to make commercial decisions on where to source their products, and that the NMDPRA’s role is to ensure that quality products are sold to consumers and at a fair price.
Setting the record straight on the dangers of monopoly on the importation of fuel in a recent interview on a national television, oil and gas industry expert, Ademola Adigun explained that deregulation of NNPC’s fuel importation monopoly and price stability are the keys to solving Nigeria’s lingering fuel crisis.“We need to start asking when we will move from Monopoly to at least duopoly. Because of monopoly, we are at the mercy of NNPC. I believe that the Petroleum Industry Act, PIA, is clear. This law allows any marketer operating in this country to import petroleum from anywhere he chooses as long as the seller is willing to sell and the importing company is willing to buy. It is a law, and no one, I repeat, has no appeal, and no one can change it fiat unless the edict is amended. And if that is done, it will amount to a serious violation of the whole vision and essence of deregulation,
,”Adigun explained. He further added that a permanent solution to Nigeria’s oil industry challenges is to stick to deregulation and urgently find a way of ensuring price stability.
On encouraging homegrown solutions by patronizing Dangote Refinery, Governor Uzodimma has also probably not been following on the recent developments with Dangote Refinery and marketers. While Chairman of the Refinery, Aliko Dangote in a recent meeting summoned by President Bola Tinubu said the Refinery is large enough to meet Nigeria’s daily petroleum consumption with 500 million litres in storage and therefore urging marketers to come buy from it, some salient points made by the marketers on challenges they face accessing products from the Refinery have not been properly examined nor properly addressed. The Governors seemed to be reacting based on what they read or heard from the respected founder of the refinery.
Just on Friday, the Independent Petroleum Marketers Association of Nigeria (IPMAN) revealed that it was more expensive to buy petrol from Dangote Refinery than importing or buying from depot owners in Nigeria.
National Secretary of IPMAN, Yakubu Suleiman, revealed this in an interview on Arise News Channel. Suleiman said members go for more affordable options at other depots across Nigeria than the high logistical costs associated with buying petrol from the Dangote refinery.
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“If Dangote has a product selling for N1,000, let’s assume, and there’s another place selling for N900, we can’t just say, for the sake of our relationship with Dangote, that we’ll instruct our members to buy there. We must go where the price is lower, where we’ll get profit,” he said.
“As of last week, Dangote’s price was higher than other places.
“Crude prices are coming down internationally, but Dangote’s rate was N995 per litre, and you have to arrange for your own cargo and loading. With additional costs for transport and depot fees, how can we sell it at the final outlet?
“We have to pity Nigerians. IPMAN is trying its best to support the country, especially at this difficult time when people are suffering. We want to source cheaper products to sell at affordable prices for the people.”
Uzodimma and his colleague- governors should understand that oil industry players including members of IPMAN, DAPMMAN, MOMAN and others have at different times openly expressed willingness to buy products from Dangote, but the conditions must be right, including the price of offloading and the ease of loading.
These groups and other stakeholders have, at different times, visited Dangote to discuss how they could commence business with his refinery. According to the IPMAN Secretary, they have made several of these visits, and on each occasion, Dangote promised to get back to them. ” Till now, he never did. It is not politicians that will solve this problem, “he concluded.
Shomefun, Public Affairs Analyst, wrote in from Abeokuta.
