Oil marketers want preferential FX rate for aviation fuel

*Fuel pump nozzle.

*Fuel pump nozzle.

*Seek dollars to stockpile petrol ahead of Christmas, decry multiple taxation
*NNPC: Egina to add 200,000bpd to Nigeria’s oil output by 2018

03 October 2016, Lagos — Despite the preferential foreign exchange rate given to oil marketing firms by the international oil companies (IOCs), aimed at sustaining the importation of petrol into the country, the Major Oil Marketers Association of Nigeria, MOMAN, has decried the non-allocation of the same preferential FX rate for the importation of aviation fuel.

MOMAN has equally condemned the multiple levies, taxes, fees and charges on imported products by agencies of the same or different tiers of government, and urged the federal government to summon the courage to halt the annual fuel crisis during the yuletide season by empowering marketers and importers with the required FX to stockpile products ahead of the Christmas and New Year festivities.

In a communiqué issued yesterday by the committee of chief executives of Forte Oil Plc, Mobil Oil Nigeria Plc, Total Nigeria Plc, Oando Plc, Conoil Plc and MRS, the marketers stated that the cost of petrol at the international market had soared to $548 per tonne and called on the federal government to ensure that the dollar/naira parity should stay at a level that would sustain the sale of petrol at the open market price band of N135-N145 per litre.

Owing to the scarcity of FX, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, a few months ago, negotiated a deal with the IOCs that prioritised oil marketers and allows the oil multinationals to sell FX directly to their downstream counterparts at a preferential rate in order to maintain the peg on the price of petrol at N145 per litre.

In the communiqué, the major oil marketing companies yesterday acknowledged what they described as the serenity in the supply of petrol in the country and extended their appreciation to the Ministry of Petroleum Resources, the NNPC and all other stakeholders.

“We note that there are some few glitches here and there and we call on the regulatory agencies to face these challenges with a view to nipping all nefarious activities associated with supply and distribution in the bud.

“Unknown to the general public, the private sector has depended on foreign exchange supplied into the system by the IOCs (international oil companies) through the intervention of the Hon. Minister of State Petroleum Resources.

“In order for the private sector to continue to play its role in the importation of PMS (petrol), the dollar/naira parity should stay at a level that will ensure that the open market price band of N135-N145 is maintained. This is especially so because the CIF price of petrol is rising in the international market. Today it is approximately $548 per tonne,” the CEOs explained.

They applauded the effort of the petroleum minister but drew the attention of the government to the product situation during the winter months, which coincide with reduced output of petrol in refineries abroad and increased activities of motorists in Nigeria as a result of the dry season and festive period.

In this regard, the oil marketers urged the government to summon the required courage to halt the annual ritual of product outages during the yuletide season.
According to MOMAN, the federal government should empower marketers and importers with the required FX to stock pile products in the country well ahead of the Christmas and New Year festivities.

The association also blamed the intermittent tightness in the supply of aviation fuel to the airlines, to the non-allocation of FX for the importation of jet fuel.

This situation has defeated the government’s intention of making Nigeria the aviation hub of the sub-region, they said.

On the issue of multiple taxes, the marketers noted that the government has the right to apply legitimate taxes, levies, fees and charges on goods and services.

The companies, however, condemned a situation where two agencies of the same state government apply the same law to charge different taxes or the states and federal governments are charging the same taxes on the same goods and services, and described the multiple taxes and levies as a disincentive to business.

The communiqué, which was signed by the Executive Secretary of MOMAN, Mr. Obafemi Olawore, also urged all tiers of government to review their tax policies and apply a single tax regime for the same service provided.

The committee of CEOs also lamented the deplorable condition of roads and charged the government to quickly fix the roads which have become traps leading to the loss of lives and property.

“We wish to draw the attention of stakeholders and regulators to safety regulations especially in the gross tonnage of tankers and the ability of the road to absorb the weight of loaded tankers.

“We also wish to appeal to the government to reduce the import duty on these haulage trucks to enable transporters meet the new replenishment policy which forbids the engagement of old or used trucks.

“The safety implications of not replenishing an aging truck fleet cannot be over-emphasised,” said the oil firms.

The oil marketing firms also called on the relevant agencies of government to review, monitor and enforce set standards in line with international best practices in the standardisation of trucks, retail outlets, and products specifications.

Egina to Add 200,000bpd by 2018
In a related development, NNPC yesterday projected that Nigeria’s crude oil production was expected to increase by 200,000 barrels per day (b/d) by the first quarter of 2018.
This, according to the State-run oil firm, would be made possible with the commissioning of the Umbilical Flowlines and Risers (UFR) for the Egina Deep Offshore Project.

Speaking during the load-out ceremony of the UFR for the Egina project by Saipem Contracting Nigeria Limited in Port Harcourt, Rivers State, the Group Managing Director of the NNPC, Mr. Maikanti Baru, also restated the commitment of the corporation to the development of local content in the oil and gas industry.

A statement by NNPC said Baru disclosed that the module would guarantee the drilling of the first oil from the 200,000bpd Egina field by the first quarter of 2018.

He commended Saipem for the successful completion of the Egina UFR project, including the engineering, procurement, construction, installation and pre-commissioning of 52 kilometres (km) of oil production and water injection flowlines; 12 flexible jumpers; 2km of an oil export line; 20km of gas export pipelines alongside the installation; and commissioning of 80 kilometres of steel tube umbilical and mooring of the FPSO and offshore loading terminal. (OLT).

He said: “What is being celebrated is the efficacy of the Nigerian Content Act and the NNPC is strongly committed to the successful implementation of all provisions of the Act.”
Also speaking, the Managing Director of Total, Nicholar Terahz, said the Egina project was the largest contributor to the development of the Nigerian content in the oil industry, being the largest offshore project currently going on in the country.

He noted that the employment opportunities and technology transfer the project generated contributed significantly to the nation’s economy.

In his remarks, the Managing Director of Saipem, Guido D’Aloisio, said the performance of Nigerian engineers on the project was commendable, adding that the country would be proud of it.
The Executive Secretary, Nigerian Content Development, and Monitoring Board, Simbi Wabote, who was represented by the board’s Director, Planning, Research & Statistics, Daziba Patrick Obah, said that the quality of jobs done on the project by Nigerians and the gains thereof would further deepen Nigerian content in the oil industry.

Discovered in 2003, the Egina field is located at some 20km from the Akpo field within Oil Mining Lease (OML) 130 and is situated in a water depth of 1,750m.

*Ejiofor Alike – Thisday

About the Author