A Review of the Nigerian Energy Industry

Marketers blame supply hitches for high petrol prices

02 June 015, Lagos – The high prices of petrol all over the country have been attributed to inequalities between the independent petroleum marketers and their major counterparts.

IPMAN-fuel pumpWhile the major marketers have continued to stick to the N87 official pump price fixed by the Federal Government, independent petroleum marketers have refused to do likewise but have resorted to selling petrol for prices ranging from N120 to N200 per litre.

However, two independent marketers, who spoke to our correspondent in confidence, attributed the development to the current constraints in the market, which they said were beyond their control.

One of the marketers said the independents had higher exposure to risks compared to the major marketers.

According to the marketer, the price differential between both groups of marketers remains a function of the economies of scale they are separately exposed to.

Currently, independent petroleum marketers are said to have the highest customer complaint cases in the market. The complaints range from fraudulent adjustment of dispensing pumps, product adulteration to poor customer treatment.

To this end, the Chairman, National Union of Petroleum and Natural Gas Workers, Lagos Zone, Alhaji Tokunbo Korodo, told our correspondent in a telephone interview on Monday that the fact that only the Nigerian National Petroleum Corporation was the one importing petrol remained a challenge to the market as far as supply and prices were concerned.

He said only the major marketers could afford to sell petrol at the official pump price as they owned their own depots and trucks.

According to Korodo, independent marketers buy products from other marketers who own depots at an additional cost, while also paying to hire tankers and for some logistic costs.

He said as long as the NNPC remained the sole importer of petrol, there were bound to be some levels of market imbalances.

“Independent marketers have many additional costs to struggle with. They neither own depots nor tankers. They need to pay for such services and other abnormal costs,” he explained.

Meanwhile, for some weeks now, queues for petrol at filling stations have continued to affect free flow of traffic on major and feeder roads in most states of the federation.

In Lagos and Ogun states, the traffic situation has been seriously affected by such queues.

Owing to this, transport fares in some areas have continued to remain high and most households have minimised their usage of petrol to power their generators.

Amid these anomalies, the Independent Petroleum Marketers Association of Nigeria, Major Oil Marketers Association of Nigeria and the Depots and Petroleum Products Marketers Association have continued to call for the deregulation of the petroleum downstream sub-sector.

But the Petroleum and Natural Gas Senior Staff Association of Nigeria, through its President, Mr. Francis Johnson, said an abrupt removal of fuel subsidy was not the solution to the myriads of problems the country was having in the petroleum downstream sub-sector, adding that the move would create chaos that might ground the economy.


– Punch

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