• Product sells for N175 outside Lagos, S’West
• Marketers link high prices to supply challenges
The Federal Government has spent N20.9 billion to bridge the gap in the price of petrol in seven months. But this has failed to deliver a uniform amount paid for the product across the country.
The Guardian learnt that the Petroleum Equalisation Fund (PEF) paid as much to marketers to ease supply and harmonise product prices from May to November 2016, yet consumers in some states have been buying petrol at above the regulated price of N145 per litre.
The government’s failure to tame prices after spending such a huge sum of tax payers’ money depicts corruption and wastage in fiscal policy implementation
Since May last year, when the Federal Government fixed the pump price of petrol at N145 per litre, the product has sold for as much as N175 per litre in states like Borno, Taraba, Adamawa, Ebonyi, Yobe, Bayelsa, Kogi, Cross River and Abia.
Two weeks ago, the government ordered the immediate payment of N150 billion owed petroleum marketers for the delivery of the product across the country. This amount is supposed to take care of losses solely incurred by marketers for selling petrol at uniform prices throughout the nation.
Many who think the fund should be scrapped called for the deregulation of the downstream sub-sector.
Scrapping the fund, according to an oil and gas analyst and consultant, Ifeanyi Izeze, would eliminate fraud and racketeering of petrol which is still being sold at exorbitant prices outside Lagos.
For example, although the official price of petrol is N145 per litre, the National Bureau of Statistics (NBS) stated that the product sold for N152 per litre in Kwara, Bayelsa and Kebbi states in December 2016, thereby defeating the purpose of PEF. The continued payment of the money to marketers has been described by stakeholders as a waste of revenue, as those in the hinterland that are supposed to be the major beneficiaries are actually buying petrol at higher rates.
The PEF oversees petroleum-bridging activities and reimburses marketers the cost of transporting the product from supply points to retail outlets.
Stakeholders have faulted the PEF’s responsibility and called for the scrapping of the fund for not meeting its primary objective.
Petroleum marketers payment data from PEF shows that the agency paid N5,444,669,092 in May, N4,434,901,752 in June, N1,265,541,081 in July, N2,629,728,987 in August, N1,909,933,887 in September, N1,305,006,795 in October and N3,826,310,124 in November to ensure uniform pump price of petroleum products in the country.
On the need to scrap the fund, Izeze told The Guardian that what Nigerians did not know is that the northern part of the country is entirely fed by “bridged” petroleum products from the coastal depots, particularly the Atlas Cove and some private facilities mainly in the Lagos area.
He noted that the government, in the first instance, agreed to the concept of “equalisation” because it wanted fuel to sell at a uniform price anywhere in the country. “So it was meant for the good of the ordinary Nigerians. But these oil marketers and tanker owners collect the differentials and sell the same products in black markets in Lagos, abandoning the people the programme was meant to serve to their cruel fate. You see wickedness! No wonder in some parts of Nigeria, petrol sells for between N200 and N300 per litre. The riverine areas in the south are not spared in this wickedness,” he added.
Izeze called on all stakeholders, including the presidency, civil society and the National Assembly to even ascertain the extent of loss and drain by the tanker owners and their collaborating oil marketing companies.
The Managing Director of Integrated Oil and Gas Limited, Capt. Emmanuel Iheanacho, said initiating support measures like the bridging fund would create price disparity in the market. He added that the best way to get the cheapest prices in the market is by lifting all the regulations with regard to selling price.
“Once you can provide foreign exchange at a reasonable rate, you know that the price of fuel moves up and down without regard to what our policy makers wish. If there is adequate supply in the market, the prices will come down. We should come to the level where everyone who has a licence to trade issued by the Department of Petroleum Resources (DPR) can procure the product and put in the market and the interplay of market forces will force down the price.
“If we continue to dictate prices, allow all kinds of support measures, we will create distortion which will bring about price disparity in the market.”
On scrapping of the PEF, General Manager, Corporate Services (PEF), Goddy Nnadi said it would be difficult as it helped to equalise the price of petroleum products across the states.
“If today you are selling fuel at N145 per litre in Lagos, the bridging rate from Lagos to Abuja is about N3, which would have been added to the cost of the product, but is being taken care of by the fund to be able to buy the product at the same rate,” he added.
According to Nnadi, the agency puts into consideration the location of retail outlets all over the country, how and who transports the products to the outlets and the volume that arrives there.
Nnadi added that the mandate of the board is to ensure that the uniform pricing mechanism works effectively throughout the country.
The National Operations Controller, Independent Petroleum Marketers Association of Nigeria (IPMAN), Mike Osatuy, cautioned against scrapping PEF, saying it had helped to regularise the price of petroleum products. “Petrol is being sold at N145 in many states in the country and this shows that the PEF fund is working. The high cost of petrol in some states is a result of supply challenges in those areas. My opinion is that the PEF should not be abolished,” he said.