Petrol Price Jack-up And Buhari’s Downstream Of Corruption

By: Ifeany Izeze

Why is this government doing things as if its main agenda is to deliberately inflict pain and hardship on Nigerians? How can a government that rode on the back of the poor masses of this country to power be this insensitive or rather blatantly wicked and anti-people?

Whether anybody wants to hear this or not, since the history of the downstream subsector of the Nigerian oil industry there has never been an era of confusion and pursuit of selfish interests like the present Mohammadu Buhari’s dispensation.

How do you explain that from N145 through N148 petrol prices in the last few weeks, the PPMC announced a new pump price of N151.56 per litre?

Is it not funny that the Petroleum Products Marketing Company (PPMC) on Wednesday last week adjusted the ex-depot price of petrol twice within a few hours?

The new price of N147.67 was made public shortly after the PPMC announced an initial increment to N151.56 per litre from the erstwhile price of N138.62 per litre.

The only reason adduced by the nation’s apex oil concern was that it was as a result of a rise in the price of crude oil in the international market, which affected the price of petrol locally.

According to the corporation, “In June 2020, the average crude oil price further increased by $10.04, or 34.7 per cent, month-on-month, m-o-m, to $38.97 per barrel. Similarly, the OPEC Reference Basket (ORB) increased by $11.88, or 47.2 per cent m-o-m, to $37.05 per barrel, while ICE Brent and NYMEX WTI rose by $8.36, or 25.8 per cent and $9.79, or 34.3 per cent, to close at $40.77 per barrel and $38.31 per barrel respectively.”

This old argument is rubbish at best. If petrol price in this country was N87 per litre when the prices of crude oil at the international markets hovered around $100 per barrel how do you explain that it is now N151.56 when crude oil prices at the spot markets is $38.97 per barrel?

The question is: what parameters did the NNPC/PPMC used to arrive at the current price template given the prevailing values in the international market?

And why is the NNPC still fixing prices of petrol when they have told us that the sector is fully deregulated and no more subsidy payment?

It is insulting for the ruling All Progressive Congress to try to defend the latest wave of price jack-up by saying in its statement that “The pricing template now reflects competitive and market-driven components which is supported by the citizenry.” Which citizenry was the party referring to, Nigerians or ghosts?

Recall that the Southwest IPMAN leadership on Wednesday 2 of September ordered their members to sell petrol at N162 per litre in all their outlets.

Just as Nigerians were still trying to make sense out of the confusion in the downstream petroleum industry, concerning the price of petrol and whether it has been fully deregulated or not, the issue of subsidy (under-recovery) payments on petrol, again resurfaced, as the NNPC last week, said it incurred over N5.35 billion as under recovery in June 2020.

According to its Monthly Financial and Operation Reports for June 2020, released last weekend, the NNPC said it had recorded zero subsidy payments in April and May 2020, after it had recorded under recovery of N43.31 billion, N20.68 billion and N37.66 billion in January, February and March 2020 respectively.

Recall that the Minister of State for Petroleum Resources, Timipre Sylva, had few weeks back, stated that the Federal Government had deregulated the downstream petroleum sector since March 2020, thereby relieving the government of the burden of fuel subsidy and giving oil marketers the freedom to determine fuel price, with guidance from the Petroleum Products Pricing and Regulatory Agency (PPPRA).

So how can NNPC reconcile paying itself the abolished subsidy for June? Maybe the corporation has even collected those of July and August. Nigeria we hail thee!

In its attempt to wriggle itself out of the massive public bashing, the same NNPC, in a statement few days from the release of the Financial and Operation Reports for June came out to say that the N5.35 billion it incurred from payment of marketers in June 2020 was not under-recovery but differentials in Petroleum Product Pricing Regulatory Agency (PPPRA) verified stock, whatever that means.

Curiously, the peculiarity with the current NNPC’s system of subsidy is that since 2017, the corporation had been the sole importer of petrol into the country and the organisation is making the payments to itself by deducting the amount as cost from its revenue before making remittances to the Federation Account. Meanwhile it does not pay a dime to other oil marketers as was the case in past subsidy regimes.

Under-recovery, also known as subsidy, occurs when the pump price of petrol is lower than the actual cost price of the commodity. In this case, the NNPC, through its subsidiary, NNPC Retail or through oil marketers, sell the product to consumers at a particular price, which is allegedly lower than the cost of the product, and turn around to pay itself subsidy to cushion against the loss. You see the scam?

Hear the Group General Manager, Group Public Affairs Division of the NNPC, Dr. Kennie Obateru: “The under-recovery in the report represents payment for stock held by marketers at the onset of the removal of subsidy by the federal government. Since the subsidy removal started with reduction in pump price, marketers have to be paid the differential of the PPPRA verified stock they held and it is spread over a period of six months.”

Now that Oil marketers have come out, with a statement, on Monday 31s August (few hours from the NNPC’s claim), to express surprise over the resurfacing of petrol subsidy in June 2020 as disclosed by the Corporation in its latest operations report, we wait to see how NNPC will respond to them.

According to the marketers, the government had since March this year declared that the downstream oil sector had been fully deregulated and as such there was no need for petrol subsidy.

Without mincing words, The Independent Petroleum Marketers Association of Nigeria (IPMAN) and the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) told the media in Abuja that they did not receive a dime as subsidy payments from government..

But the National Public Relations Officer, IPMAN, Ukadike Chinedu, said it was surprising to hear of subsidy payments when the downstream sector had been deregulated.

His words: “They didn’t pay us any subsidy money. You are also aware that the market has been deregulated. We are now dispensing products based on international crude oil market price.

“You are also aware that in the months of February, March, April, May and June, the PPPRA released guiding prices for petrol based on price deregulation. So as at what point did the subsidy come in?”

On whether marketers got any support when the pump price of petrol crashed from over N140 per litre to about N125 per litre some months ago, the IPMAN official said nothing of such happened. His words: “There is no differential that was paid to us because when they reduced the cost of the product from N145 to N123, they did not pay any differential to anybody.”

The National President, PETROAN, Billy Gillis-Harry, also reportedly said members of his association were not paid any money.

He said, “We have not been paid any money by anybody. As I speak to you now, we are having price issues. Some stations have not been able to sell their products and are trying to see whether they can sell at a lower price.”

How longer can this nation afford to allow this deliberately created confusion to continue? As we talk, no one knows the exact amount to pay for one litre of petrol anywhere across the country. We now understand why it makes better sense to the government people to import all the fuel we need rather than make genuine efforts to revamp our nameplate refineries. God will sure judge all of you without exception. God bless Nigeria!