Independent oil marketers have received the all-clear to join the Nigerian National Petroleum Corporation (NNPC) in the importation of premium motor spirit (PMS), also known as petrol.
In a report monitored on the Voice of Nigeria (VON), the Petroleum Products Pricing Regulatory Agency said that permits had been given to several marketers to start importing petrol alongside the NNPC.
Before the downstream oil sector was liberalised in March this year, the NNPC used to be the sole importer of petrol, a task it handled for more than two years.
The General Manager, Corporate Services, PPPRA, Kimchi Apollo, said the sole petrol importer status of the NNPC had changed, as his agency recently gave various oil dealers permission to import.
“Well, as far as I am concerned, many of the marketers have gone to import because they took Quarter Nominations (QN) from us to bring in products and I am sure they are doing that already.
The QN is an approval given to marketers to import and it is renewed every quarter for marketers who intend to go on importing. You come to us to say you want to bring in products and then we say go ahead based on the pass that we give,” he said.
Apollo added that some marketers came and they got the go-ahead permit to bring in products.
He explained that the market had been liberalised, with both the NNPC and other marketers now shopping for refined petroleum products from international refiners.
“The market now is such that both the NNPC and other marketers are on the same level of going to buy from the international market to sell to final consumers,” the GM stated.
He said all qualified marketers who approached the agency and had the competence to import petrol were cleared for such operations.
Apollo also noted that the agency had been working with the Central Bank of Nigeria (CBN) to make foreign exchange available to marketers for petrol imports.
“Both major marketers and others who have the competence to bring in products have been given QNs to do so. However, there are yardsticks that should be met before any marketer can bring in products.
Also, the PPPRA is doing its best to liaise with the CBN to ensure that marketers are not discriminated against. They too should have access to foreign exchange as much as the NNPC. So they should have a level playing ground,” he said.
While the latest development is a reflection of the wishes of OMCs and operators in the downstream sector, several issues bordering on the sustainability of the process are yet to be addressed.
Last week, M&P reported that experts in the industry are circumspect about embarking on the market liberalisation regime without a legal framework backed by dissolution or discontinuation of an existing regulation or law.
Prof. Wumi Iledare, the former President, Nigeria Association of Energy Economics (NAEE) said that “To deregulate, there must be a regulation gazette not implied from executive order or in the front pages of the newspaper. You cannot have an unstructured PPPRA and Petroleum Equalisation Fund (PEF) and claim to have a deregulated downstream sector.”
Oil marketers have also pointed out that there was an urgent need for the Federal Government to increase the margins on petrol in order to encourage more investments into the downstream sector of the oil industry.
Some other issues that require urgent attention include “Whether the OMCs will be constrained to sell their products within the current guiding price band of NGN123.50 – NGN125 per litre of PMS regardless of foreign exchange fluctuations?
Stakeholders are also asking if OMCs will be able to access subsidized foreign exchange to enable them sell the product within the current price band.
Furthermore, they have questioned “What the new role of the PPPRA will be in the emerging dispensation and also wonder whether OMCs need harbour fear of unfair competition from the government run retail outlets?
Finally, what becomes the fate of the “direct sale of crude oil and direct purchase of products” (DSDP) contracts with private companies?
An email forwarded to the General Manager Corporate Services of the PPPRA, seeking answers to these questions, was not answered at press time.