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Fuel Queues Return to Lagos Amid Supply Hiccups

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Adenuga
  • Fuel Queues Return to Lagos Amid Supply Hiccups

After more than a year of relief from fuel scarcity in the country, filling stations in some parts of Lagos experienced queues on Monday, while some refused to sell Premium Motor Spirit, popularly known as petrol, to motorists.

The pockets of fuel queues in Lagos emerged few days after the Independent Petroleum Markers Association of Nigeria, Lagos State chapter, accused the Nigerian National Petroleum Corporation of under-supplying its members with petrol.

IPMAN had said last week that its members in Lagos and parts of Ogun State might be forced to shut their filling stations by December 11 if the situation persisted.

A source, who is an executive of a Lagos-based oil marketing company, told our correspondent, “This is the second week in which supply has not been very robust.

“The rationing started the previous week. The NNPC has been the major supplier and there have been distribution dislocations since the Apapa jetty got burnt, making it difficult for major oil marketers to get products; they have to be doing throughput with other companies, because they can’t receive products through that line until the repair is completed.”

Noting that demand for petrol had increased due to the approaching Yuletide, he said depot prices had gone up.

“So many depots are selling above the recommended price of N133 per litre; it is averaging between N140 and N142.5. When you know you have 10 million litres and you know people make payment of about 20 million litres on a daily basis, automatically you will begin to ration and in the process of rationing, there will be so many hidden charges,” the official stated.

The Group Managing Director, NNPC, Dr. Maikanti Baru, while reacting to the allegation by IPMAN last Thursday at the inauguration of the NNPC mega station in Sagamu, had noted that the corporation was importing about 100 per cent of the petroleum products in the country, saying there were sufficient products.

He said, “We distribute at the ex-depot price of N133 per litre; so there is no reason why anybody should sell above N145 per litre. So if some people are playing around, I will leave it for the relevant regulatory authorities, the DPR and the PPPRA to take care of. As for IPMAN, I want to advise that this is not the route to go.

“They know what it means to go on strike; to deprive people of products will be the saddest thing that will happen because I have sufficient products and I am selling within the PPPRA price template.”

IPMAN had particularly complained of shortage of product supplied to the Ejigbo satellite depot, which, it said was serving more than 900 filling stations in Lagos.

The association alleged that the NNPC was not only under-supplying its members with the PMS, but was also frustrating them by reneging on the bulk purchase agreement it signed with its members to supply the product to them at N133.28k per litre.

It said with the under-supply from the NNPC, its members were being forced to approach the Depot and Petroleum Marketers Association, which was allegedly buying at N117 per litre from the NNPC and reselling to IPMAN members at N141 per litre.

It added that at that rate, it had become unrealistic for them to continue to sell to the end users at the regulated price of N145 and still expect to break even in business.

Meanwhile, the NNPC on Monday stated that there was no plan to increase the prices of petroleum products both at the ex-depot level and the pumps ahead of the forthcoming Yuletide.

It insisted that the ex-depot price of N133.38 per litre and the pump price of N143/N145 per litre of Premium Motor Spirit, popularly known as petrol, had not changed, adding that it had enough stock to ensure seamless supply and distribution of products across the country.

The corporation urged motorists and other users of petroleum products to disregard rumours of an impending fuel price hike on some online news platforms.

The NNPC said it had the full commitment of all downstream stakeholders, including petroleum marketers and industry unions, to cooperate in achieving zero fuel scarcity this season and beyond.

It added that motorists should not engage in panic buying or indulge in the dangerous practice of stocking petroleum products in jerry cans at home.

The corporation said its downstream subsidiary firms, Petroleum Products Marketing Company and the NNPC Retail Limited, were fully set to ensure that motorists enjoy uninterrupted access to petrol throughout the season across the country.

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

Fitch Agency Revises Nigeria’s Growth Projection for 2021

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Fitch Ratings

Fitch Agency Revises Nigeria’s Growth Projection for 2021

Fitch Ratings, one of the world’s leading agencies, has revised down Nigeria’s growth projection for 2021.

The global rating agency predicted that Nigeria will grow by 1.5 percent in 2021, down from the previous 2.3 percent projection.

Fitch based its latest prediction on weaker base effects coming out of a shallower contraction recorded by the country in 2020.

While the agency said oil exports would be the main growth driver for Nigeria in 2021, consumer spending and investment were expected to remain subdued because of the rising inflation and the slow distribution of the COVID-19 vaccine.

Fitch Ratings, however, said Africa’s largest economy could expand by 2.7 percent in 2022, adding that by then it “expect Nigeria’s vaccination programme to gather pace, which will result in private consumption and fixed investment accelerating.”

“We at Fitch Solutions have revised our estimate for Nigeria’s real Gross Domestic Product (GDP) to a contraction of 1.9 per cent in 2020, compared to our previous estimate of a 3.2 per cent fall. The revision follows the release of stronger than expected GDP data indicating that the economy exited recession in the fourth quarter of 2020, growing by 0.1 per cent year-on-year, after contracting by 3.6 per cent in the third quarter of 2020 and by 6.1 per cent in the second quarter of 2020.

“The agriculture and services sectors led the Q4 2020 rebound, expanding by 3.4 per cent and 1.3 per cent respectively, resulting in non-oil growth rising by 1.7 per cent compared to a 2.5 per cent fall in Q3 2020. The oil sector (around 8.0% of GDP) contracted by 19.8 per cent in Q4 2020 – its third consecutive quarterly contraction – because of falling oil production and weak prices.

“Crude production slowed to 1.56 million barrels per day (b/d) in Q4 2020 from 1.67 milion b/d in Q3 2020, partly because of Nigeria’s commitments under the OPEC+ deal, while the price of Brent fell to an average of $43.2 per barrel (/bbl) in 2020 compared to $64.2/bbl in 2019,” it stated.

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Economy

Stop Maize, Soybean Export to Reduce Scarcity – NIAL

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Farm input

Stop Maize, Soybean Export to Reduce Scarcity – NIAL

The Nigerian Institute of Animal Science on Tuesday called on the Federal Government to halt the continued export of maize and soybean to reduce the scarcity of the commodities as well curb their price hike in Nigeria.

Registrar and Chief Executive Officer, NIAL, Prof. Eustance Iyayi, told journalists in Abuja that the poultry sector was currently hit by the severe scarcity of maize and soybean.

This, he said, was due to the continued export of the commodities, the COVID-19 pandemic, which had disorganised the international supply chain, lingering insecurity in the North-East, farmers/herders conflict and flooding in some parts of the country.

“Maize and soybean are being exported and this has exacerbated the situation leading to local scarcity and price escalation of the commodities in poultry production,” Iyayi stated.

He added, “The increasing prices of the essential commodities has resulted in the increase in price of finished feeds by about 75 per cent.

“This has led to the closure of small and medium sized poultry farms thereby threatening about 10 million jobs as a result of this scarcity.

“To set the poultry industry from total collapse, the institute urges the government to immediately halt the exportation of soybean and maize and grant import permit to importers at the official foreign exchange rate.”

Iyayi said there was shortage of soybean in Nigeria and other countries, stressing that the little amount being produced across the country should not be exported.

He said the current maize yield of about one to two tonnes per hectare being produced in Nigeria would not be enough to sustain the country.

The NIAL helmsman stated that the country should be producing between seven and 10 tonnes per hectare in order to meet the requirements for humans and animals.

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Economy

Petrol Landing Cost Jumps to N186, Oil Hits $64

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Petrol Landing Cost Jumps to N186, Oil Hits $64

Against the backdrop of the rising price of oil prices, the landing cost of Premium Motor Spirit (petrol) imported into Nigeria has increased to N186.33 per litre.

Investors King had exclusively reported on February 9 that the landing cost of PMS rose to about N180 per litre on February 5 from N158.53 per litre on January 7.

Crude oil price accounts for a large chunk of the final cost of petrol, and the deregulation of petrol price by the Federal Government last year means that the pump price of the product will reflect changes in the international oil market.

Going by the petrol pricing template of the Petroleum Products Pricing Regulatory Agency, the landing cost of petrol rose to N186.33 per litre on February 16, with the pump price of the product expected to be N209.33 per litre.

The international oil benchmark, Brent crude, closed at $63.96 per barrel on February 16, up from $59.34 per barrel on February 5.

The rising price of crude oil pushed the cost of petrol quoted on Platts to $560.75 per metric tonne (N163.08 per litre, using N390/$1) on February 16 from $543.25 per metric tonne (N157.99 per litre) on February 5.

Other cost elements that make up the landing cost include freight (N10.29), lightering expenses (N4.57), insurance cost (N0.25), Nigerian Ports Authority charge (N2.38), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N1.33).

The freight cost increased to $35.41 per MT (N10.29 per litre) last Wednesday from $30.04 per MT (N8.74 per litre) on February 5.

The pump price is the sum of the landing cost, wholesale margin and the distribution margins. The wholesale margin is N4.03 while the distribution margins comprise transporters allowance (N3.89), retailer (N6.19), bridging fund (N7.51), marine transport average (N0.15), and admin charge (N1.23).

Apart from the changes in global crude oil prices, the exchange rate of naira to the dollar also affects the cost of imported petrol.

The cost of petrol would be higher if the 410/$1 rate at which the naira closed on Monday at the Investors’ and Exporters’ Foreign Exchange Window was used. The naira closed at 480/$1 at the parallel market.

The Nigerian National Petroleum Corporation, which has been the sole importer of petrol into the country in recent years, is still being relied upon by marketers for the supply of the product despite the deregulation of the downstream petroleum sector.

Oil marketers said recently that they were ready to resume importation of petrol if the foreign exchange was made available to them at a competitive rate.

“The discussion we should be having today is how best to maximise the benefits of the removal of price controls and subsidies while minimising the adverse effects of this action on our citizens,” the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, said at a virtual press briefing.

Brent crude, against which Nigeria’s oil is priced, rose by $1.67 to $64.58 per barrel as of 6:08pm Nigerian time on Monday.

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