A Review of the Nigerian Energy Industry

Glut forces marketers to sell petrol below ex-depot price

Fuel-dispencer19 August 2014, Lagos – Oil marketing and trading companies and other importers of petroleum products in the country were at the weekend selling premium motor spirit (PMS), otherwise known as petrol below the government-approved ex-depot price due to the glut in the market.

Even though marketers are still being owed huge arrears of subsidy claims, imported products have flooded the market, fueling concern on the source and identity of the importers of the products.

Investigations have revealed that NIPCO Plc, MRS, Lister, Folawiyo, Capital Oil and several other depots in Lagos were selling at ex-depot price of N87 per litre against the government-approved price of N87.66.

It was however gathered that major marketers such as Oando, Conoil, Mobil, Forte Oil, and Total were not selling to other retail outlets except their own petrol stations.

Before this latest development, marketers used to sell at ex-depot price of between N90 and N93, against the N87.66 approved by the Petroleum Products Pricing Regulatory Agency (PPPRA).

The hike in ex-depot price had made it difficult for the product to be sold at retail outlets at the recommended official price of N97 per litre, forcing some marketers to adjust their pumps to shortchange the public.

The current glut in the market has been described by some marketers as a very strange development in view of the huge unpaid subsidy claims, reduction of import allocation in the third quarter and the sustained reduction of the number of importers, which were expected to have created at least, a minor scarcity of products in the system.

Some marketers, however, attributed the development to rainy season, which is known in industry parlance as “wet season” because of abundance of petroleum products due to less usage.

“Petrol is always available at this time of the year. We call it wet season. In the third quarter like this, the system is always awash with petroleum products because many people do not move about because of the rainy season. So, petrol does not get exhausted easily,” said one of the marketers.

Some of the marketers, however, questioned the source of the products, saying that with the unpaid subsidy claims, coupled with a slash in both import allocation and the number of importers licensed in the third quarter, the market is supposed to experience scarcity and not glut.

“Subsidy claims have not been paid. So, not many people are importing. And as part of the measures to reduce subsidy claims, the government has been slashing import allocation and the number of importers. So, where are the products coming from? It is a puzzle,” another marketer argued.

In a move to avert a repeat of the fuel crisis experienced in the first quarter of this year, which was caused by a delay in the release of the import allocation for the quarter, the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, has promptly released the third quarter import allocation ahead of schedule.


– This Day

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