Over the years, the Nigeria National Petroleum Corporation now Nigeria National Petroleum Company Limited has monopolized petroleum products importation making it difficult for other players in the sector to compete; BENJAMIN UMUTEME writes.
The discovery of oil in Nigeria was supposed to bring economic transformation for the country but over 60 years down the line the pace of development continues to be a source of worry to Nigerians and non-Nigerians alike, who believe that oil wealth should have transformed the country.
With the country unable to refine its crude oil for local consumption, Nigeria has had to do with importing petroleum products with its scare foreign exchange at the detriment of carry out its obligation to citizens.
This, is partly due to on functional refineries that have defied various Turn Around Maintenances by past administrations.
Meanwhile, despite subsidising petrol, it has often been difficult to maintain steady supply of the product to Nigerians especially with issues of smuggling and other sundry issues.
However, experts and industry players alike have said that without the country refining its own products present issues of in petroleum sector will continue.
For instance, in the last 6 months, it has been difficult for Nigerians to get petrol. And the blame game continues among major stakeholders in the industry.
This, itself has thrown up, issues around whether the present structure of petroleum distribution is not the big elephant in the room.
Huge incentive
Speaking recently, the Group CEO of Nigeria National Petroleum Company Limited, Mele Kyari had identified smuggling of petroleum products across Nigeria’s borders as a drawback to efforts to make the product available to Nigerians.
Kyari, the incentive to smuggle was so high that many marketers find it difficult to resist.
Countries in the West African sub-region don’t subsidise petroleum products, thus, relying on products from Nigeria for supplies.
According to the NNPCL helmsman, massive smuggling of petrol outside Nigeria’s shores would not stop until the government dealt with the current arbitrage situation.
Arbitrage is the practice of taking advantage of a difference in prices in two or more markets, the profit being the difference between the market prices at which the product is sold.
“I’ve made it very clear that it is practically impossible (to stop smuggling) in the arbitrage environment, and also in a situation where your neighbours are helpless, for you to say that there’ll be no cross-border movement of petroleum products.
“It is simply impossible to stop this until you are able to resolve this arbitrage issue.”
Importation fueling scarcity
Over the years, there have been calls on the federal government to do away with petrol subsidy. Many argue that despite subsidies, it has increasingly become difficult to buy fuel at the official price across the country.
There are arguments that the removal of subsidies on petrol will discourage smuggling of the product across the border.
In a chat with Blueprint Weekend, development researcher, Adefolarin Olamilekan said the regime of fuel importation is partly responsive for the scarcity that the country continue to experience.
He noted that the inability of authorities to get the refineries working in spite of being a major oil producing nation has led a gap that unscrupulous businessmen are filling.
He pointed out that as an oil producing nation, Nigeria has no business importing the same commodity it has in abundance.
He said: “Unfortunately, successive government and managers of our national affairs do not see it that way. Fuel importation regime is now an economic governance that further deflect our national revenue.”
He opined that allowing other private sector players to participate in petrol importation will partly address the product scarcity.
“Since we have found ourselves in this embarrassing dilemma, we should allow organized private sector to participate in fuel importation particularly, as means breaking the monopoly of NNPCL in the sector having discovered the poor capacity of NNPCL and their failure to guarantee product availability.”
“This not a bad idea, going by the need to ensure we have steady supply across the country and stabilize it prices,” he said.
“In the same vein, National Operations Controller of Independent Petroleum Marketers Association of Nigeria (IPMAN), Mike Osatuyi, lay the blame of the scarcity at the feet of NNPCL-thw sole importer of petroleum products.
Speaking further, Adefolarin said the government is not forward thinking in it’s approach to tackling petroleum products’ scarcity in Nigeria.
According to him, lack of poor supervision has not helped.
“We should not also forget that the failure of successive government to ensure our four national refineries work efficiently is the bane of fuel importation regime,” he explained.
For the IPMAN chief, independent marketers who form 80 percent of the supply chain, don’t have product to sell.
“We are not hoarding petroleum products. Some have not sold a single product for two weeks now.
“We don’t have the products. 1.6billion can be anywhere. If we have it, the whole country would be experiencing scarcity of petroleum products. And it’s the fuel of the NNPCL, they didn’t bring in products.
“When you order online, you don’t products for about 2 months. They are going to be selling at official ex-see depot price which they have not been doing for a long time,” he said.
‘Doing it right’
Experts have blamed the insincerity of government for the quagmire in petroleum products supply.
They say, this has created the gap that is being explored by people eager to make profit from the loophole in the system.
“I believe, as a nation a lot insincerity is being displayed by political actors, public and civil servants managing the oil and gas sector.
“The failure of government to do it right is created gaps that many unpatriotic citizens take advantage off.
“In this wise government must stand firm to correct all the abnormalities that have become normal in the sector.
“Further is for the government to stamps out corruption and saboteurs in the sector. This will also require other stakeholders doing it rightly. Those like the Independent Petroleum Marketers Association (IPMAN), Major Oil Marketers Association of Nigeria (MOMAN) and Petroleum Depot Owners Association of Nigeria (PDOAN), must show commitment and patriotism even though they are out to make profit.
“Lastly, the government must sanction and prosecute economic sabotage perpetrators in the sector,” Adefolarin said.
Deregulate the sector
For Osatuyi, the government should import massively so that the price can come down drastically and there would be petrol.
“What we are saying in IPMAN is that, they should deregulate, remove subsidy, so that all these queues can stop. When you deregulate, it brings openness, reduces corruption, there will be competition and there will be no rent. And people are able to buy at the best price because of you out price yourself, you will not sell. So, we have more benefit in deregulation than we have now.
“We want refineries to work. We are ready to work with government agencies so that the price can come down.
“We should note that when they remove subsidy, the price will go up, we cannot eat out cake and have it,” the IPMAN National Operations Controller explained.
