At a pump price of ₦167 per litre, Nigerians are currently overpaying for fuel, an industry expert, Alhaji Rabiu Bello, has revealed.
Bello, a former Chief Operating Officer/Group Executive Director, Upstream Business Unit at the Nigeria National Petroleum Corporation (NNPC) disclosed this at the weekend during a roundtable on ‘Deregulation of Nigeria’s Downstream Oil Sector’ in Abuja.
At the event which had other industry experts like Dr Adeoye Adefulu, Henry Adigun, and others, Bello pegged the exact pump price of fuel at N146.75, saying for the month of November alone, Nigerians subsidised the NNPC to the tune of about ₦700 million daily.
He said; “Nigerians are currently paying about N167 per Litre of PMS (Petrol), but the basis of pricing PMS in Nigeria today is the ‘The PMS Market Based Pricing Regime Regulations, 2020’, whereby PPPRA is expected to monitor market trends and advise NNPC and other Oil Marketing Companies on the monthly guiding price of PMS.
“The actual market situation for the current month, including the cost of importing PMS, landing charges, storage, transportation, margins for wholesalers and retailers etc, which are all stated in the PPPRA template serve as a guide for the price of PMS next month.
“An independent review and analysis of the PPPRA template by Foster consultants show that actual C& F cost of PMS for the month of October was US$415 per MT (N111.41 per Litre at ₦360 per US$ Exchange Rate. when you add all the other cost elements in the PPPRA template, the total open market price should be a maximum of ₦146.75.
“This should be the maximum price Nigerians should pay for PMS in the month of November instead of the ₦167 announced on November 15.
“The difference of ₦20 per litre for daily consumption of about 35 million litres will translate to ₦700 million that Nigerians are paying above the expected open market price. In other words, Nigerians are subsidizing NNPC at an average of ₦700m daily in the month of November 2020”.
Bello also added that “NNPC in its monthly financial and operations for the month of July stated that between June 2018 and July 2020, the corporation’s operating losses for their refineries was N325 billion while N262 billion was expended on Pipelines repairs and management. This is available public information!”
He said the way forward is for Petroleum Products Price Regulatory Agency PPPRA to take its regulatory responsibility and take charge of monitoring the market trends and advising all players and consumers, the guiding prices for PMS as enshrined in the published regulations.
On his part, Dr Adefulu said Nigeria is arguably the only major oil producer in the world without a functioning downstream sector, “so, rich in feedstock (crude oil) but having to import its finished product. From a commercial standpoint, a money loser”.
He said with Nigeria’s opaque deregulation of the downstream sector, a lot of things would continue to go wrong.
“What can go wrong? A ‘pseudo-privatization’ of the refinery happens, but NNPC stays in control and the assets revert to the current inefficiencies and underutilization. So long as NNPC is in control and as a monopoly, there is no commercial/private imperative to be nimble and efficient.
“Price of crude goes up significantly, NNPC’s cost of PMS importation goes up and it tries to pass it on to customers – who have not been socialized on why or how the price of petroleum products float with the price of crude in a deregulated market
“With lack of transparency and poor consumer confidence, increase in PMS price may be rejected by the consumers and take us back to subsidy or under-recovery”.