Another hike in the price of Premium Motor Spirit (PMS) may be imminent, as petroleum marketers have proposed a new pump price of N165 per litre for the product, saying that the subsisting price of N145 per litre is no longer sustainable due to the scarcity of foreign exchange to finance fuel importation.

They lamented that the current price is driving them out of business.

In a letter submitted by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) to the chairman, House of Representatives ad-hoc committee on review of pump price of premium motor spirit, the marketers argued that in May 2016 when the price of petrol was reviewed from N97 to N145 per litre, the exchange rate was based on N285 to a dollar.

They noted that from June 2016 till date, the exchange rate had been fluctuating between N305 and N490 to a dollar, and argued that the cost of product with freight charges and other cost elements in the Petroleum Products Pricing and Regulatory Agency (PPPRA) template will bring the landing cost to N145.09 per litre at the official rate of N305 per dollar, or N222.23 per litre using the parallel market rate of N490 to a dollar.

The marketers therefore proposed N165 per litre to cover the cost of forex required for products importation, as the free fall of the naira against the dollar is seriously impacting on the pump price.

They said: “The recent appreciation in the prices of crude oil at the global oil market is another argument favouring the upward review of PMS in Nigeria. The gradual increase in the global oil price impacts the pump price since most of the local consumption is imported. Crude oil is refined and imported to Nigeria from other countries, which made the business to be dollarised.

“However, the PPPRA keeps assuring the public that the existing price band of N135-N145 per litre was still okay and, therefore, no basis for increase in the pump price of PMS. The NNPC equally assured there is no immediate plan to increase the pump of price of petrol.

“As much as we are stared in the face with the above facts, we believe that this is not the right time to review the pricing template of PMS due to the following reason: the country is currently consuming about 40.32 million litres of petrol on a daily basis. Prior to now, marketers used to import 70 per cent of petrol while NNPC imported 30 per cent of the local needs. The major challenge now is that NNPC is the sole importer of petroleum products,” it said.

The marketers however acknowledged that the economy was biting hard on all Nigerians and that any attempt to further review the template will aggravate the suffering of ordinary Nigerians as the additional price will be transferred to the end users of the product and negate government’s effort to revert the present recession.

The marketers, however, stressed the need for all an all-embracing stakeholders’ forum to holistically look into the issues raised by all parties in order to find a solution to the challenges without hurting the masses.

In a related development, House of Representatives attributed the current pump price of petrol (N145) to “unnecessary charges” by the PPPRA.

The ad hoc committee on the review of the price of PMS at a public hearing yesterday, said the N145 per litre pump price was causing Nigerians “great pains and suffering.”

The legislators said for instance, 30 kobo, which was meant for “administrative charge”, was provided for in the 2016 budget but Nigerians still pay for it.

The lawmakers said there is also similar provision for such charges in the 2017 budget proposals.

According to the chairman of the committee, Nnanna Igbokwe, “In the 2017 budget, which is before us, PPPRA has a proposal of another N500 million for regulation, monitoring and supply of petrol. This budgetary provisions have already taken care of the purpose for which you charge 30 kobo on the template, yet Nigerians continue to bear the burden by paying N145 per litre.

“This has left Nigerians in a situation whereby they still pay for lightening services for smaller vessels that go to Cotonou or Lome to offload products from mother vessels. PPPRA will then add the cost to the pump price and ask Nigerians to pay.

“Can Nigerians be paying the cost of capital by importers and dealers? Can Nigerians be paying for lathering services when there are agencies whose duties are to dredge our sea? How effective and transparent is the bridging claims?”

Responding, exewcutive secretary of PPPRA, Victor Shidok, told the committee that the 30 kobo administrative charge was used for data capturing and monitoring of staff deployed to depots across the country.

Investors’ confidence in Nigeria’s oil industry waning – OPEC

The Organisation of Petroleum Exporting Countries (OPEC) has warned the President Muhammadu Buhari administration against the declining confidence of investors in the country’s oil and gas industry, saying that if the administration fails to fix the problems in the sector, it will take the blame for any negative outcomes.

The oil cartel disclosed this in its bulletin for November-December 2016, in which it said that Nigeria needs to combat insecurity in the Niger Delta region and to pass the Petroleum Industry Bill (PIB) in order to lure waning investors.

“Nigeria’s action plan can convert the present challenge into an opportunity — failure to do so will be targeted at the President Buhari regime,” OPEC said.

The document stated that the country’s reforms, encapsulated in the ministry of petroleum’s ‘7 BigWins’ roadmap, are being greeted with mixed reactions from industry players.

“Operators are waiting to see how the road map will materialise and were unwilling to publicly comment on it,” OPEC said via the bulletin.

Industry expert reactions were mixed, with one senior banking source telling the OPEC Bulletin: ‘I do not believe the new road map (which is a rehash of previous ones) will make an iota of difference on the sector. It remains to be seen what, if anything, will actually be done by this government to improve the tragic situation in the Delta.’”

Josh Holland, senior energy analyst at IHS, said that the plan’s mere publication was a step in the right direction, as this showed transparency.

He demanded more details about structural changes in the hydrocarbons sector, particularly the NNPC; the government’s plans for forging a political consensus and overcoming vested interests to ensure that reform moves ahead, and Nigeria’s relative competitiveness compared to other oil and gas investment destinations.

OPEC noted that “investor confidence in the petroleum industry has fallen with the coalescence of insecurity in the Niger Delta, the delay to pass the PIB, and failure to meet contractual obligations in the services industry.

“A major reform of fiscal terms and effective institutional governance, the PIB has stalled in the legislative process for over seven years. A divergence of interests has derailed its passage: oil companies are opposed to fiscal terms, arguing they undermine investment plans, while the government has countered that the fiscal terms are competitive.”

Meanwhile, the minister of state for petroleum resources, Dr. Ibe Kachikwu, has urged International Oil Companies (IOCs) to invest in building refineries in the Nigeria.

Speaking at a presentation to top executives of ENI in Rome, Italy, yesterday, Dr. Kachikwu enjoined the group to move beyond just the business of crude exploration to firmly supporting the vision of enhancing local production of petroleum products in Nigeria by building refineries in the country.

He stated that the major plan of the federal government was to stop the importation of petroleum products in the long term, adding that it would be expedient that every IOC invest in building a refinery with a chain of distribution outlets.

Kachikwu further assured the IOCs that they could build the refineries and within a short period of time recoup their investment by direct sales model.

He gave a historical background of the challenges of the sector,stating that the investment is necessary now more than ever considering the fact that Nigeria’s refineries, which were built in the 1970s and 1980s, are presently working at sub-optimal levels and cannot sufficiently cater for local needs, hence the country is heavily dependent on product importation which creates instability in supply and price of products in the country.

According to a press statement signed by the director of press, Ministry of Petroleum Resources, Mr. Idang Alibi, the meeting is in furtherance to the minister’s commitment to the full implementation of the 7BigWins, which is the roadmap that focuses on the short and medium term priorities to grow Nigeria’s oil and gas industry.

The meeting was rounded off with the signing of a Memorandum of Understanding (MOU) between the ENI and Nigerian National Petroleum Corporation (NNPC), with ENI committing to the refurbishment of the Port Harcourt Refinery, building of Phase 2 of the Okpai Power Plant and further investments in Nigeria’s oil and gas industry worth several billions of dollars.

The statement noted that, in continuation of the ongoing investment drive in Italy, Kachikwu will be meeting the ministers of Foreign Affairs and Economic Development of Italy to formalise this new trend of cooperation between oil majors and Nigeria.

He will also meet with 10 other oil and gas companies in Italy to further expand the partnerships and investments in Nigeria’s oil and gas sector, it added.

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