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Reps Want Fuel Sold at N70 Per Litre

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petrol
  • Reps Want Fuel Sold at N70 Per Litre

The House of Representatives on Tuesday faulted the current pricing template for Premium Motor Spirit, better known as petrol, saying that a realistic pump price should not be above N70.04 per litre.

It, therefore, asked the Petroleum Products Pricing Regulatory Agency and Ministry of Petroleum Resources to review the current price template of PMS with a view to bringing down the price of the product.

The landing cost of the product today is N119.74k, while the distribution margin and other costs add up to N18.37k, bringing the total to N138.11k.

However, marketers are allowed to sell petrol in the range of N140 and N145 per litre.

But, on Tuesday, the House, acting on a motion moved by Mr. Abubakar Hassan-Fulata, noted that 90 per cent of the current cost of PMS (N124.34k) was introduced by factors that were unnecessary.

It said the factors were related to transport charges, which were transferred to consumers by the marketers.

Lawmakers argued that removing such unnecessary charges would not affect the profit margin of the marketers if the Federal Government put all the needed infrastructure in place.

In his lead debate, Hassan-Fulata listed some of the charges as lightering expenses, N4.56k; bridging fund, N6.20k; freight, N109.01k; NPA charges, N0.84k; and transport allowance, N3.36k.

He also said the landing cost had inbuilt charges that when removed would not affect the profit margins of the importers and marketers.

The lawmaker cited jetty charges, NIMASA charges, storage charges and retailers’ margin, among others, as costs that could be removed without affecting the profit margin of the marketers.

For instance, he stated that the current bridging charge of N6.20k could be reduced to just N2.00 per litre if the pipelines linking the refineries and the depots across the country were not vandalised.

Hassan-Fulata, “Bridging is supposed to be an annual event only when the refineries are carrying out their turnaround maintenance, which does not exceed three months.

“However, due to the fact that the pipelines linking the various depots have been vandalised or are in a state of disrepair, bridging has remained a permanent feature of the oil industry in Nigeria.”

Similarly, he said the N2.00 built into the price for the maintenance of storage facilities was wasteful as it did not benefit any public-owned depot.

“The fund goes to enrich an ever-growing number of private depot owners, whose facilities have now become the official storage facilities for government products, while government facilities are allowed to decay,” he told the House.

Many lawmakers also faulted the N4.56 lightering charge on the ground that vessels conveying products into the country were not docking directly at the harbours.

The motion for the review of the pump price received unanimous endorsement of members at Tuesday’s plenary, which was presided over by the Speaker, Mr. Yakubu Dogara.

The House directed the Ministry of Petroleum Resources to ensure that the price review was done within eight weeks.

However, petroleum products’ marketers faulted the call for petrol to be sold at N70 per litre.

According to them, the landing cost alone is far higher than N70 at over N128 per litre.

The marketers stated that the challenge in accessing foreign exchange and the fall of the naira against the United States dollar were factors that would make it practically impossible to sell petrol below the regulated rate of N145 per litre.

They told one of our correspondents that the Federal Government still owed them subsidy claims as well as differentials as a result of accrued interests on the debt, running into several billions of naira.

A member of the Major Oil Marketers Association of Nigeria said, “What are their reasons for calling for N70 petrol price? Are they aware of the current economic realities and how the oil and gas sector operates? It is practically impossible at the moment, despite the huge debt being owed us, other factors show that it can’t happen.”

The Group General Manager, Group Public Affairs Division, Nigerian National Petroleum Corporation, Mr. Ndu Ughamadu, said that the oil firm would not react to the demands of the House of Representatives.

This, he said, was because the corporation had yet to get any directive to that effect from the House.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Electricity Consumers Get 611,231 Meters Under MAP Scheme

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Electricity Consumers Get 611,231 Meters Under MAP Scheme

A total of 611,231 meters have been deployed as at January 31, 2021 under the Meter Asset Provider initiative since its full operation despite the COVID-19 pandemic and other extraneous factors, the Nigerian Electricity Regulatory Commission has said.

NERC disclosed this in a consultation paper on the review of the MAP Regulations.

The proposed review of the MAP scheme is coming nearly four months after the Federal Government launched a new initiative called National Mass Metering Programme aimed at distributing six million meters to consumers free of charge.

“The existence of a huge metering gap and the need to ensure successful implementation of the MYTO 2020 Service-Based Tariff resulted in the approval of the NMMP, a policy of the Federal Government anchored on the provision of long-term low interest financing to the Discos,” NERC said.

The commission had in March 2018 approved the MAP Regulations with the aim of fast-tracking the closure of the metering gap in the sector through the engagement of third-party investors (called meter asset providers) for the financing, procurement, supply, installation and maintenance of meters.

It set a target of providing meters to all customers within three years, and directed the Discos and the approved MAPs to commence the rollout of meters not later than May 1, 2019.

But in February 2020, NERC said several constraints, including changes in fiscal policy and the limited availability of long-term funding, had led to limited success in meter rollout.

NERC, in the consultation paper, highlighted three proposed options for metering implementation going forward.

The first option is to allow the implementation of both the NMMP and MAP metering frameworks to run concurrently; the second is to continue with the current MAP framework with meters procured under the NMMP supplied only through MAPs (by being off-takers from the local manufacturers/assemblers).

The third option is to wind down the MAP framework and allow the Discos to procure meters directly from local manufacturers/assemblers (or as procured by the World Bank), and enter into new contracts for the installation and maintenance of such meters.

“Customers who choose not to wait to receive meters based on the deployment schedule of the NMMP shall continue to have the option of making upfront payments for meters which will be installed within a maximum period of 10 working days,” NERC said.

The regulator said such customers would be refunded by the Discos through energy credits, adding that there would be no option for meter acquisition through the payment of a monthly meter service charge.

“Where meters have already been deployed under the meter service charge option, Discos shall make one-off repayment to affected customers and associated MAPs. Such meters shall be recognised in the rate base of the Discos,” it added.

NERC urged stakeholders to provide comments, objections, and representations on the proposed amendments within 21 days of the publication of the consultation paper.

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Economy

Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

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Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

Nigeria is moving in the right direction economically but its movement is not fast, the United Nations stated on Thursday.

Deputy Secretary-General of the United Nations, Amina Mohammed, said this during a meeting at the headquarters of the Federal Ministry of Industry, Trade and Investment in Abuja.

She said the challenges in Nigeria were huge, its population large but described the country’s economy as great with lots of opportunities.

The UN scribe stated that after traveling by train and through various roads in the Northern parts of Nigeria, she discovered that the roads were motorable, although there were ongoing repairs on some of them.

Mohammed said, “This is a country that is diverse in nature, ethnicity, religious backgrounds and opportunities. But these are its strengths, not weaknesses.

“And I think the narrative for Nigeria has to change to one that is very much the reality.”

Speaking on her trips across parts of Nigeria, she said, “What I saw along the way is really a country that is growing, that is moving in the right direction economically. Is it fast enough? No. Is it in the right direction? Yes it is.

“And the challenges still remain with security, our social cohesion and social contract between government and the people. But I know that people are working on these issues.”

She said the UN recognised the reforms in Nigeria and other nations, adding that the common global agenda was the Sustainable Development Goals.

Mohammad commended Nigeria’s quick response to the COVID-19 pandemic, as she expressed hope that the arrival of vaccines would be the beginning of the end of COVID-19.

On his part, the Minister of Industry, Trade and Investment, Adeniyi Adebayo, told his guest that the Federal Government was working hard to make Nigeria the entrepreneurial hub of Africa.

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Economy

N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

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N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

Nigeria spent a total of N10.7tn on fuel subsidy in the last 10 years, the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, has said.

Oyebanji, who was the guest speaker at the 18th Aret Adams Lecture on Thursday, said N750bn was spent on subsidy in 2019.

He highlighted the need for a transition to a market-driven environment through policy-backed legislative and commercial frameworks, enabling the sustainability of the downstream petroleum sector.

“Total deregulation is more than just the removal of price subsidies; it is aimed at improving business operations, increasing the investments in the oil and gas sector value chain, resulting in the growth in the nation’s downstream petroleum sector as a whole,” he said.

The managing director of 11 Plc (formerly Mobil Oil Nigeria Plc) said steps had been taken, “but larger and faster leaps are now required.”

According to him, deregulation requires the creation of a competitive market environment, and will guarantee the supply of products at commercial and market prices.

“It requires unrestricted and profitable investments in infrastructure, earning reasonable returns to investors. It requires a strong regulator to enable transparency and fair competition among players, and not to regulate prices,” Oyebanji said.

He noted that MOMAN had recently called for a national debate by stakeholders to share pragmatic and realistic initiatives to ease the impact of the subsidy removal on society – especially on the most vulnerable.

He said, “A shift from crude oil production to crude oil full value realisation through deliberate investment in domestic refining and refined products distribution, creates the opportunity to transform the dynamics of the downstream sector from one of ‘net importer’ to one of ‘net exporter’, spurring the growth of the Nigerian economy.

“Effective reforms and regulations are key drivers for the growth within the refining sector. Non-functional refineries cost Nigeria over $13bn in 2019. If the NNPC refineries were operating at optimal capacity, Nigeria would have imported only 40 per cent of what it consumed in 2019.”

Full deregulation of the downstream sector remains the most glaring boost to potential investors in this space, according to Oyebanji.

He said, “As crude oil prices will fluctuate depending on the prevailing exchange rates, it will be astute to trade in naira to avoid inevitable price swings.

“There needs to be a balance between ensuring the sustainable growth of the crude oil value chain (upstream through downstream) and providing value for the Nigerian consumer and the Nigerian economy.”

He said the philosophy should be for the government to put the legislative and commercial framework in place and let the market develop by itself.

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