Subsidy removal rumour raises pump price to N200 per litre
By Jeph Ajobaju, Chief Copy Editor
Speculation about fuel subsidy removal and the high cost of diesel are part of the reasons for the new round of fuel scarcity in Lagos, Nigeria’s populous state, that began creeping back into paralysis on Sunday, after surviving the choke in April.
The pump price of petrol has risen to between N170 and N200 per litre in many cities North and South, from Katsina and Kano to Lagos, Akure, Ado-Ekiti and Benin, Aba, Port Harcourt to Calabar and Uyo.
There is petrol scarcity in Abuja and surrounding states, up to Plateau, as well as in Lagos and other South West States. But there is no scarcity in the South East and South South, just that the pump price has gone up in the two zones.
As for diesel, the price has risen to more than N800 per litre in all states and many fuel tanker operators say they cannot afford the cost of powering their vehicles to convey petrol across the country.
Besides, marketers say the government is owing them N500 billion bridging claims which subsidise the cost of transporting fuel to ensure the pump price is uniform nationwide. And the current bridging claim is no longer sufficient for running costs.
The price of diesel and delay in the payment of bridging claims are the two main reasons Abuja has not really got out of fuel shortage since March, even though supply in Lagos and other states returned to normal after the six weeks of chaos.
“The manager asked us to shut the station not because there is no fuel but because the price of fuel may go up this week due to the scarcity of the product,” one petrol attendant said in Lagos on Monday.
So fuel scarcity returned to parts of Lagos, with queues forming since Sunday at filling stations on Lagos-Ibadan expressway, Ikorodu road, Ikoyi, Obalende, Lagos Island, Lagos Mainland, Obafemi Awolowo Way, and other sections of the city.
The official pump price of petrol is between N162 and N165 per litre. But it now sells for between N170 and N200 countrywide. Marketers say N180 per litre is the base at which they can operate at profit.
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Market survival
“With the current price, there is no way we can sell less than N180 per litre,” Independent Petroleum Marketers Association of Nigeria (IPMAN) Lagos Depot Secretary Akeem Balogun insisted in a statement, per reporting The Nation.
“Members are hereby advised to sell at a sustainable price within their environment. Just make sure that the price is on your pump.
“Kindly contact the Secretariat should you have any authority challenging your operations.”
Many petrol stations in Lagos have been shut down.
IPMAN Lagos Satellite Depot Chairman Akin Akinrinade explained that the stations were closed because marketers can no longer operate at a loss and in a hostile environment.
He said the government fixed maximum pump price at N165 per litre even when current realities show the minimum price should be N180.
His words: “As you can see, the queues are back and this is the second time we are witnessing it this year.
“However, this one is peculiar in the sense that for a particular reason, IPMAN members decided to shut their stations.
“This is not because we are on strike, but because we can no longer do business under this condition.”
Akinrinade said IPMAN members are not getting supply from the Pipelines and Product Marketing Company (PPMC) to which they have paid more than N1 billion since October 2021.
Marketers are forced to buy from private depots at higher cost while they also service bank loans, he lamented.
“Our plight is worsened by private depot owners who increased the ex-depot price of PMS [petrol] from N148.17 to N162 per litre.
“When you factor in the handling charge, transportation and running cost of our stations, you will see that even within Lagos, the minimum we can retail petrol is about N180 per litre.
“We want Nigerians to know that we are not out to sabotage the effort of the government because we know this hike in petroleum products prices is not peculiar to Nigeria.
“The ongoing conflict between Russia and Ukraine has disrupted the supply chain and we know that the Nigerian government is doing its best to mitigate its impact on our nation.”
Akinrinade urged Abuja to direct the private depots to revert to the old ex-depot price for petrol or deregulate the downstream sector to allow market forces to determine the price.
He also sought resumption of pumping of products through the PPMC Ejigbo depot, saying it would enable IPMAN members to get supply at a cheaper cost.
Supply chain disruption
A source in the Major Oil Marketers Association of Nigeria (MOMAN), who pleaded anonymity, attributed the scarcity to disruption in the supply chain.
He said when there is disruption it “takes an average of almost two weeks to get it back to normal. The NNPC restored supply late on Monday but motorists and commuters may have to cope till next week when normalcy is expected to return.”
But IPMAN National Operations Controller Mike Osatuyi warned that “marketers have been loading from the stock they had and we are running low on the product because we haven’t received fresh supply.
“The situation will be worse if nothing is done urgently and when the old reserve we have runs out.”
Abuja
The situation in Abuja remains as it has been since March, with most private depots shut down due to a lack of supplies. Only the overcrowded mega stations of the Nigerian National Petroleum Company (NNPC) sell fuel.
“Most of the private depots in Abuja and other places have no product. This is apart from the cost of the diesel, which is the main cause.
“If care is not taken, this scarcity will bring serious hardship to the public,” IPMAN National Vice President Abubakar Maigandi said.
Rationing at filling stations
A fuel attendant at an Oando filling station in Lagos disclosed that the directive to shut the station was given by its manager on Sunday afternoon.
“The manager asked us to shut the station not because there is no fuel but because the price of fuel may go up this week due to the scarcity of the product.”
The manager at an Enyo filling station in Lagos, who preferred anonymity, explained that his management decided to sell only N3,000 worth of fuel to each motorist on Sunday afternoon in order to manage the little stock they have.
“We were informed to do that because nobody knows the decision the federal government may take this week or soon. There is a tendency that the price may go up this week,” he said, per reporting by Nairametrics.
“The tanker drivers are not also finding it easy to buy diesel, whose price has skyrocketed too. Diesel is too expensive and at the same time scarce. If they don’t get diesel, how will they supply us fuel?”
Chinedu Okoronkwo (IPMAN National President)
“The war between Russia and Ukraine has disrupted the smooth distribution of petrol and marketers and transporters are also finding it difficult to bridge products to other parts of the country from the depots because of running cost.
“The huge amount spent in running diesel trucks to transport fuel is very discouraging because we are running at a loss.
“The current N165 per litre pump price for PMS [petrol] cannot fit into the present realities without the pricing template being reviewed.
“We appeal to the government to look into the situation by either reviewing the freight rate or providing palliatives to all marketers to restore normalcy to distribution.
“The palliative can be making diesel accessible for marketers at discounted rates so that we can easily transport products across the country.”