Cheap petrol has become unsustainable, DAPPMAN warns
Sopuruchi Onwuka
Supply brokers in the domestic fuel market have declared that it has become increasingly difficult to continue supplying petrol to Nigerian motorists at prevailing subsidized rate of N165 per liter, pointing at rising cost of operation and thin margins.
Depot and Petroleum Products Marketers’ Association of Nigeria (DAPPMAN) stated on Tuesday that whereas it members would continue to cooperate with the Nigerian National Petroleum Company (NNPC) Limited in sustaining retail of the products, the sacrifices is becoming unsustainable.
The market bulk breakers are weighing in on the prevailing strife in the market which has prompted the Independent Petroleum Marketers Association of Nigeria (IPMAN) to shut members’ retail stations to protest rising cost of operation and draining margins.
The withdrawal of services by IPMAN has thrown motorists into panic, leading to fuel queues at filling stations operated by members of Major Oil Marketers Association of Nigeria (MOMAN) and DAPPMAN.
Our survey of the market yesterday showed that some operators of filling stations in Lagos have already switched their pumps to the N180 per liter demanded by the IPMAN, eventhough the market group has not directed them to do so.
In empathizing with teeming Nigerian public on the current distribution hiccups in the supply of premium motor spirit also called petrol from the various petrol stations dispensing at N165 per litre; the group stated that it is working in concert with NNPC Limited, through its marketing subsidiary, to ensure availability of products nationwide.
It however pointed out that depot owners and the government have continued to struggle over time to sustain supply of PMS at the current pump price of N165 per litre despite the huge subsidy cost to government and abysmal margins to the Depot owners.
The marketing companies blamed the cost surge in the market on disruptions inflicted on the global trade logistics by the ensuing war sparked by Russia’s invasion of Ukraine and corresponding ripple effects in the global petroleum markets.
“Nigerians would recall that the on-going Russian / Ukraine War has adversely affected the whole world, including our country Nigeria, impacting negatively on global and local fuel and food supply, as the international prices of these items have risen astronomically and have more than doubled their old rates since the beginning of the war, thereby causing extreme increases in local prices.
“By extension, the local running costs of operating our various fuel depots have gone up astronomically. The petrol we supply is sourced solely from NNPC Limited’s marketing subsidiary, Petroleum Products Marketing Company Limited (PPMC), for sale to the public at the regulated price of N165 per litre.
“This purchase is made by Depot Operators with funds sourced with high bank interest charges, alongside increased costs of hiring vessels, with which we deliver the fuel cargoes to our depots. These costs have doubled within the period of this Russian/Ukraine war.
“Added to this is the scarcity of bunkers (ship’s fuel). We also experienced astronomical increases in the cost of diesel used to power equipment and machinery in our various depots and our retail outlets,” the group explained.
In reiterating the persistent calls by players in the domestic fuel market for total deregulation of prices, the depot owners emphasized the need to activate the Petroleum Industry Act (PIA) which provides for market deregulation and liberalization.
“But for its suspension, the implementation of the Petroleum Industry Act 2021 would have provided an ideal enabling environment by creating the free market in which demand and supply would affect fuel pump price,” DAPPMAN stressed.
“We hereby assure the public that Depot Owners, working in concert with NNPC Limited, through its marketing subsidiary, will continue to work hard to ensure availability of products nationwide.”
