A Review of the Nigerian Energy Industry

Over 78% Nigerians still buy petrol above pump price – Survey

Fuel-queue*Majority still oppose full deregulation of industry

Oscarline Onwuemenyi

20 May 2014, Sweetcrude, ABUJA – Nigerians across the country continue to suffer from arbitrary and indiscriminate pricing of petroleum prices, despite assurances by authorities to clamp down on marketers selling more than the official price of N97 per litre.

The latest results of the Petrol Price Monitoring Polls conducted by NOIPolls Limited has revealed a significant 47-point increase in the proportion of Nigerians who bought petrol above the official pump price from January (31%) to March 2014 (78%).

The result of the survey also showed a majority of Nigerians still oppose government efforts to completely deregulate the petroleum industry and the removal of the subsidy for petroleum products.

According to the pollsters, the result obtained in March 2014, which covers the first quarter of the year, represents the highest proportion of respondents who purchased petrol above N97 in the 15 months of conducting the Petrol Price Monitoring Polls which started from January 2013.

Furthermore, the quarterly average shows that the 53 percent of respondents purchased petrol above the official pump price of N97 with the highest obtained in the North-East and South-East zones; while only 44 percent purchased at the official price.

This quarter’s figure represents the second highest obtained in the quarterly trend on the purchase of petrol above the official price, after peaking in the first quarter of 2013 (58 percent). More findings revealed that on average, 64 percent of Nigerians bought petrol from major marketer filling stations in the first quarter of 2014.

However, monthly trend analysis shows a downward trend with a substantial 32-Point decline from January (78 percent) to March (46 percent) in the proportion of Nigerians who purchased petrol from major marketer filling stations. These findings highlight the adverse effect of the crippling fuel scarcity experienced across Nigeria in the first quarter of 2014.

In January 2012, the Petroleum Products Pricing Regulatory Agency (PPPRA) along with government announced an increase in the price of petrol from N65 to N141 as a result of the removal of subsidy for the reason that over a trillion Naira was spent in 2011 on subsidy.

Subsidy has been defined as money given by the state or public body to keep down cost of commodities. Some people see it as a form of protectionism or trade barrier because domestic goods are made affordable artificially. Within the Nigerian petroleum pricing context, subsidy would then mean selling petrol below the cost of production or importation.

The removal of the fuel subsidy led to days of protest by Nigerians led by organised labour and civil societies who were unhappy about the perceived hardship this action would cause Nigerians and the lack of notice by the government to carry out such plans. In line with this, the government as a stop-gap measure partially removed subsidy, thereby bringing the official pump price of petrol to N97.

Since January 2014, Nigerians have experienced a fresh round of acute scarcity in the supply of petrol nationwide that persisted over the first quarter. According to the Major Oil Marketers Association of Nigeria (MOMAN), this was triggered by the delay of the Petroleum Products Pricing Regulatory Agency (PPPRA) in releasing the approval for the first quarter fuel importation.

The pollsters added that over 1,500 respondents were interviewed in the three months of Quarter 1 (January-March 2014) and the respondents were asked the same ten questions for each monthly poll. Findings revealed that an average of 64 percent of Nigerians (representing the majority) bought petrol from major marketer filling stations in the first quarter of 2014. In addition, an average of 28 percent of Nigerians bought from independent marketer filling stations while eight percent bought from hawkers.

An assessment of petrol purchase by geo-political zones revealed that the South-West zone has the highest percentage of respondents (76 percent) who bought petrol from major marketer filling stations. The South-East zone has the highest percentage of Nigerians who bought from independent marketer filling stations with 44 percent, while the North-East zone (13 percent) has the highest percentage of people who purchased petrol from hawkers.

Petrol price analysis by geo-political zones revealed that the North-East and South-East zones accounted for the highest proportion of respondents who purchased petrol above the official pump price of N97 with 68 percent each. Furthermore, the highest proportion of respondents who bought petrol at N97 were from the North-Central zone (57 percent); the South-West zone accounted for the highest proportion of respondents who bought petrol at N100 (18 percent), while the North-East zone (21 percent) had the highest proportion of respondents who bought petrol above N130.

Majority of the respondents (51 percent) reported that the difference in the price of petrol stems from the lack of monitoring of petrol stations by the government. In addition, 24 percent of the respondents indicated that “filling stations are exploiting the public by hoarding petrol”; implying that filling stations create an artificial scarcity to take advantage of petrol price inflation. Furthermore another 24 percent felt that the disparity in the price of petrol is because the cost of importing petrol is not the same for all marketers.

Analysis by geo-political zones shows that the South-South zone (56 percent) has the highest proportion of respondents who blamed the government for not monitoring the filling stations. In addition, the North-East zone (29 percent) has the largest proportion of respondents that were of the view that the cost of importing petrol is not the same for all marketers, while the South-East zone (31 percent) accounts for the highest proportion of respondents that feel the petrol stations are exploiting people by hoarding fuel.

Furthermore, majority of the respondents (57 percent) are not in support of the subsidy removal while 43% are in support. Furthermore the South-East zone (56 percent), accounted for the highest proportion of respondents in support of subsidy removal while the North-West (64 percent) has the majority of respondents against the petrol subsidy removal.

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