10 November 2016, Lagos – About 80 per cent of petroleum tank farms across the country are currently lying idle as a result of massive divestment by oil marketers into the retail arm of the business, a former Executive Secretary of the Petroleum Products Pricing Regulatory Agency, Mr. Reginald Stanley, has said.
Stanley also noted that the stiff competition in the downstream oil sector would not allow marketers to sell Premium Motor Spirit, popularly known as petrol, above the approved price limit of N145 per litre despite fears of looming hike in the price of the product.
When asked whether the current market fundamentals in the downstream sector were good enough for businesses to thrive, Stanley said that it supported the retail segment but not conducive for the establishment of petrol tank farms.
He said, “The market fundamentals provide support of going into the retail side of the business. Now, does it support building tank farms? I will say categorically no! The days of tank farms are gone. Today, the capacity utilisation of tank farms in the country is about 20 per cent. That means 80 per cent of tank farms in the country are lying idle.
“And I dare say that some of those tank farms will be broken down and sold out because the capacity to engage what we have today is too large for the market. However, when you go down the retail part, there are many opportunities.”
Commenting on the pricing of the PMS at filling stations, he said the partial deregulation of the product had engendered stiff competition among marketers.
Stanley said, “The Federal Government has partially deregulated the downstream petroleum sector and has put the price of the PMS at a maximum rate of N145 per litre. It has also allowed a band in which marketers can go up or down. But we are in the heat of competition; so if you go up and the guy next door to you is at N145, you are out.
“But if you are efficient and can stay within the band, you will attract customers. So, Emadeb is a price-taker and must play within what the market is offering. Therefore, as a player in the downstream sector, you must make sure that you are efficient and within your retailers’ margin, you can play around on what will be of good impact to the public.”
The Managing Director/Chief Executive Officer, Emadeb Energy Services, Mr. Adebowale Olujini, said the firm had been a major downstream player for close to a decade, adding that it decided to expand the establishment of its retail filling stations in various states across the country in a bid to meet the demand of the PMS users.