The reason why many filling stations across the country have refused to comply with the Federal Government’s directive to sell a litre of petrol for N86.50 as against the old pump price of N87 is because most of them had stockpiled the product in anticipation of a likely price increase by the government.
Compliance by filling station owners with the new pump price of N86.50 for a litre of petrol has not been great across the country even though the Department of Petroleum Resources, the regulator of the downstream petroleum sector, has vowed to punish defaulters.
In some instances, the filling station owners and managers have become more daring, displaying new prices above the stipulated maximum on their petrol dispensing pumps.
One of our correspondent actually bought petrol at a filling station along Gbongan Road, Osogbo, the Osun State capital for N110 per litre on Monday. The price was proudly displayed on the digital dispensing machine instead of the practice before of displaying the regulated price of N87 per litre, but the attendants would inform the buyer of a higher price and the difference would be calculated based on the volume bought.
When asked why the station’s management was bold to display N110 as the pump price, a female attendant simply said that was the instruction given by the owners.
The PPPRA had on Tuesday, December 29, 2015, announced that retail filling stations belonging to the Nigerian National Petroleum Corporation would from Friday, January 1, 2016, sell petrol at N86 per litre, while other marketers would sell the product for N86.5 per litre.
In Jos, the Plateau State capital, most major marketers are still selling at N87 per litre despite the N0.50 reduction in the fuel price. Only the NNPC mega stations have adjusted their pump price to the N86 stipulated by the PPPRA.
Some of the marketers told one of our correspondents that they could not afford to sell below that as they still had old stock.
One of the attendants, who simply identified himself as Ahmed, said the inconsistency in the Federal Government’s pronouncement prompted some marketers to hoard the product in anticipation of a price increase later.
“Our station discharged a full tanker before the New Year, but we were afraid of what the new price will be. However, we are for now sticking to the old price because we are still having our old stock,” he explained.
In Anambra State, a litre of petrol sold for N140 on the average on Monday as many filling station owners pretended not to have heard about the new price regime.
An attendant at a filling station in Awka said, “I don’t know about any new price for petrol. We sell a litre here for N140.”
A manager at a filling station, who pleaded anonymity said, “The new price you are talking about may be for government filling stations like those belonging to the NNPC and not for private filling stations.
“Besides, what we have here is old stock. We didn’t even buy at that price you are talking about.”
Filling stations in Enugu State have yet to comply with the Federal Government’s directive on the new pump price of petrol.
One of our correspondents, who monitored the situation on Sunday and Monday, observed that the product was being sold for between N120 and N150 per litre in different parts of the state.
In Oyo State, one of our correspondents found out that only a few independent marketers had the product and they sold a litre at prices ranging between N100 and N130.
Some of the independent marketers, who spoke on the development, said that they purchased the product at an inflated amount in Lagos.
“We are aware of the government’s directive but the truth is that we cannot sell at the government price when we purchased the product above N100 per litre in Lagos. Look around Ibadan and you will see that only independent marketers are selling the product. The major marketers cannot because they cannot buy at a high cost and sell at a loss,” he station manager of an independent filling station in Mokola area of Ibadan said.
In Niger State, independent marketers have not complied with the N86.50 per litre price regime as one of our correspondents who went round Minna, the state capital, on Monday observed that filling stations were selling the product at the old rate of N87 per litre.
The state Controller, DPR, Mr. Abdullahi Jankara, however, said he had not received any directive from the Federal Government on the new fuel price.
Filling stations in Uyo metropolis sold the product for N130 per litre on Sunday and Monday even as many of them did not open for business.
The only filling station seen selling petrol at N86 per litre was the NNPC mega station on Ikot Ekpene Road, Uyo.
A former Chairman of the Independent Petroleum Marketers Association of Nigeria, Mr. Victor Eteafia, said the downstream sector of the economy was facing a crisis.
In major cities in Ogun State, a litre of petrol was still sold for between N100 and N130 on Sunday and Monday.
In Rivers State, the product is selling for between N130 and N140 per litre as against the Federal Government’s new price regime of N86.5.
At Romans Filling Station located on Ada George Road, petrol has been selling for N130 per litre in the past one week. The filling station had been dispensing the product for N140 per litre before Christmas.
Also in Kogi State, it was gathered that the major marketers were selling the product at N87 per litre while other marketers still sell as high as N120 per litre.
The Kwara State Chairman, Independent Petroleum Marketers Association, Mr. Olanrewaju Okanlawon, said members of the body bought their current petrol stock at the old price and would comply as soon as they start buying it at the new ex-depot price.
A former Treasurer of the Independent Petroleum Marketers Association of Nigeria, Western Zone, Mr. Shina Amoo, told one of our correspondents in Osogbo that independent marketers could not comply with the directive on the new petrol price because they bought the product higher than the approved price.
He said, “I bought the product for N102 per litre on Thursday and later I bought it at N94.5 per litre. So, you don’t expect anybody who bought at those prices to sell a litre for N86; it is not possible.
“The price will continue to come down as supply increases. Government will not need to force anybody to reduce the price; the forces of demand and supply will determine the price.”
When contacted for comment on why some filling stations were not complying with the new pump price regime, the National President, Independent Petroleum Marketers Association of Nigeria, Mr. Chinedu Okoronkwo, said he expected all outlets to comply before the end of this week.
He stated that some of the filling stations still had old stocks, adding that they would have to adjust to the new price when they finish selling those stocks.
When asked if the government was still paying the marketers the bridging claims, Okoronkwo said, “There is still bridging fund. We have not been informed of any change.”
The Federal Government, through the Petroleum Equalisation Fund, pays bridging claims to the marketers to ensure that there is uniform pricing system across the country and ensure that each marketing company complies with the laws regarding the management of the transportation equalisation process.
The Deputy Manager, Communications, DPR, Mr. George Ene-Ita, said, “If they (filling station owners) don’t comply, we will sanction them; either we shut down the stations or fine them. Monitoring is a routine thing. We have a standing monitoring and compliance unit in the DPR. It is a routine procedure; it never stops.
“It is not just to monitor and enforce the government-regulated prices, but also to monitor and enforce compliance with all regulatory issues concerning the downstream. And that is going on; we are ensuring that every marketer and every facility owner complies with the new official pump price.
Informed that some marketers were selling at higher prices because they still had old stock, Ene-Ita said, “That does not concern us. Government did not stipulate two pump prices, one for old stock and one for new stock.”
Oil Prices Decline on Rising India COVID-19 Cases, U.S Inflation Concerns
Global oil prices extended a decline on Friday following a 3 percent drop on Thursday as coronavirus cases rose in India, one of the world’s largest oil consumers.
Brent crude oil, against which Nigerian oil is priced, declined by 35 cents or 0.5 percent to $66.70 a barrel at 5 am Nigerian time on Tuesday while the U.S West Texas Intermediate (WTI) fell by 28 cents or 0.4 percent to $63.54 per barrel.
“The commodity super cycle rally just hit a hard stop and the energy market doesn’t know what to make of Wall Street’s fixation over inflation and the slow flattening of the curve in India,” said Edward Moya, senior market analyst at OANDA.
“The crude demand story is still upbeat for the second half of the year and that should prevent any significant dips in oil prices,” he added.
Prices dropped over a series of key economic data that stoke inflation concerns and forced experts to start thinking the Federal Reserve could raise interest rates to curb the surge in inflation.
An increase in interest rates typically boosts the U.S. dollar, which in turn pressures oil prices because it makes crude oil more expensive for holders of other currencies.
This coupled with the fact that India, the world’s third-largest oil consumer, recorded more than 4,000 COVID-19 deaths for a second straight day on Thursday, dragged on the oil outlook in the near term.
Brent Crude Rises to $69 on IEA Report
Oil prices rose after the release of the International Energy Agency’s (IEA) closely-watched Oil Market Report, with WTI Crude trading at above $66 a barrel and Brent Crude surpassing the $69 per barrel mark.
Prices jumped even though the agency revised down its full-year 2021 oil demand growth forecast by 270,000 barrels per day (bpd) from last month’s assessment, expecting now demand to rise by 5.4 million bpd. The downward revision was due to weaker consumption in Europe and North America in the first quarter and expectations of 630,000 bpd lower demand in the second quarter due to India’s COVID crisis.
The excess oil inventories of the past year have been all but depleted, and a strong demand rebound in the second half this year could lead to even steeper stock draws, the IEA said yesterday, keeping an upbeat forecast of global oil demand despite the weaker-than-expected first half of 2021.
However, the upbeat outlook for the second half of the year remains unchanged, as vaccination campaigns expand and the pandemic largely comes under control, the IEA said.
Moreover, the global oil glut that was hanging over the market for more than a year is now gone, the agency said.
“After nearly a year of robust supply restraint from OPEC+, bloated world oil inventories that built up during last year’s COVID-19 demand shock have returned to more normal levels,” the IEA said in its report.
In March, industry stocks in the developed economies fell by 25 million barrels to 2.951 billion barrels, reducing the overhang versus the five-year average to only 1.7 million barrels, and stocks continued to fall in April.
“Draws had been almost inevitable as easing mobility restrictions in the United States and Europe, robust industrial activity and coronavirus vaccinations set the stage for a steady rebound in fuel demand while OPEC+ pumped far below the call on its crude,” the IEA said.
The market looks oversupplied in May, but stock draws are set to resume as early as June and accelerate later this year. Under the current OPEC+ policy, oil supply will not catch up fast enough, with a jump in demand expected in the second half, according to the IEA. As vaccination rates rise and mobility restrictions ease, global oil demand is set to soar from 93.1 million bpd in the first quarter of 2021 to 99.6 million bpd by the end of the year.
OPEC Expects Increase In Global Oil Demand Raises Members’ Forecast on Crude Supply
The Organisation of Petroleum Exporting Countries (OPEC) yesterday lifted its forecast on its members’ crude this year by over 200,000 bpd and now expects demand for its own crude to average 27.65mn bpd in 2021.
This is almost 5.2mn bpd higher than last year and around 2.7mn b/d higher than an earlier estimate of the group’s April production.
According to the highlights of the organisation’s latest Monthly Oil Market Report (MOMR), OPEC crude is projected to rise from 26.48 million bpd in the second quarter to 28.7 million bpd in the third and 29.54 million bpd in the fourth quarter of the year.
The report also indicated a fall in Nigeria’s crude production from 1.477 bpd in February to 1.473, a difference of just about 4,000 bpd before rising again in April to 1.548 million bpd, to add 75,000 bpd last month.
OPEC stated that its upward revision of members’ crude was underpinned by a downgrade in the group’s forecast for non-OPEC supply, which it now expects to grow by 700,000 bpd to 63.6mn b/d against last month’s report’s projection of a 930,000 bpd rise to 63.83mn bpd.
The oil cartel projected that US crude output would drop by 280,000 bpd this year, compared with its previous forecast for a 70,000 bpd decline.
On the demand side, OPEC kept its overall forecast unchanged from last month’s MOMR, stressing that it expects global oil demand to grow by 5.95 million bpd to 96.46 million bpd this year, partly reversing last year’s 9.48mn bpd drop.
Spot crude prices fell in April for the first time in six months, with North Sea Dated and WTI easing month-on-month by 1.7 percent and 1 percent, respectively.
On the global economic projections, the cartel said stimulus measures in the US and accelerating recovery in Asian economies might continue supporting the global economic growth forecast for 2021, now revised up by 0.1 percent to reach 5.5 percent year-on-year.
This comes after a 3.5 percent year-on-year contraction estimated for the global economy in 2020.
However, global economic growth for 2021 remains clouded by uncertainties including, but not limited to the spread of COVID-19 variants and the speed of the global vaccine rollout, OPEC stated.
“World oil demand is assumed to have dropped by 9.5 mb/d in 2020, unchanged from last month’s assessment, now estimated to have reached 90.5 mb/d for the year. For 2021, world oil demand is expected to increase by 6.0 mb/d, unchanged from last month’s estimate, to average 96.5 mb/d,” it said.
The report listed the main drivers for supply growth in 2021 to be Canada, Brazil, China, and Norway, while US liquid supply is expected to decline by 0.1 mb/d year-on-year.
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