Fix Refineries, Stakeholders Challenge Government
Posted: 03/Jul/2020

While some countries are assuaging the challenges faced by their citizens amid COVID-19, decades of bad governance and waste of resources are compounding the agonies of Nigerians.

The National Assembly earlier in the week intervened with a view to shelving the planned increase in electricity tariff. But little did most Nigerians know they would wake up to a hike in the pump price of Premium Motor Spirit (petrol) on July 1, the same day the tariff was to be increased.

The Nigerian Electricity Regulatory Commission (NERC) had disclosed plan to increase tariff by about 100 per cent, as the sector struggles to perform since it was privatised in 2013. The decision was to takeoff in April but was moved to July 1. Now, the National Assembly and other stakeholders have again pushed it to the first quarter of 2021.

“The agreement is that there is not going to be any increase in the tariffs on July 1. We are in agreement, here, that there is no question on the justification for the increase but the time is simply not right, and appropriate measures need to be put in place,” said Senate President Ahmad Lawan.

The Federal Government announced earlier this year that the payment of petrol subsidy, a scheme that has long been accused of opacity and corruption, was not sustainable. It, therefore, opted for a so-called deregulated market, where government modulates the price of the commodity on a monthly basis.

Thus, the Petroleum Products Pricing Regulatory Agency (PPPRA), on Wednesday, announced a new retail price band for oil marketers, saying they are expected to sell petrol within the price range of N140.80 and N143.80.

But some Nigerians expressed shock at the development. Professor of Economics Segun Ajibola said the increase would worsen the cost of transportation, food items and other services. According to him, “petrol is very critical because it affects everything in the country. So, the increase will have a spillover effect.”

Ajibola, a former chairman of the Chartered Institute of Bankers of Nigeria (CIBN), said the lasting solution is local refining of products, otherwise, the country will continue to suffer total reliance on importation.

Executive Director at Civil Society Legislative Advocacy Centre (CISLAC), Auwal Ibrahim Musa Rafsanjani, said he was disappointed that the government could increase the cost of living, despite the unprecedented socio-economic blast of the coronavirus pandemic.

He described the action as an indication of total disconnect between government and the people. “We expected that the impact of COVID-19 would provide the government with a much-needed lesson towards holistic innovative thinking, like every other civilised nation, to block and harness loopholes to mitigate people’s socio-economic plight,” he said.

Also, the opposition Peoples Democratic Party (PDP) said the action was a punishment to Nigerians, given the current economic hardship.

It described the hike, despite the decline in the price of crude oil at the international market, as grossly unjustifiable and a pointer to the alleged insincerity of the ruling All Progressives Congress.

In a statement by National Publicity Secretary Kola Ologbondiyan, the party challenged the government to present Nigerians with the parameters it used to determine the increase, which it said could not be in tandem with the prevailing situation in the global industry.

The PDP said it is shocking that the APC government continues to impose more burden on citizens, many of whom, it claimed, have lost their means of livelihood due to the misrule of the APC.

The Nigerian Labour Congress (NLC) urged the Federal Government to convoke a national dialogue on how to better manage the price of petroleum products in the country.

“We renew our call for a national conversation on the management of our oil assets, which we insist must be in tandem with the provisions our country’s constitution, which clearly mandates that the commanding heights of our national economy must be held by the government in the interest of the citizens of Nigeria,” NLC President Ayuba Wabba declared, yesterday.

The Congress also demanded the speedy rehabilitation of the nation’s refineries, saying Nigerian workers want to be apprised of the timeline set by government to ensure that this is effectively done.

This was as Peters Adeyemi, General Secretary of Non-Academic Staff Union of Educational and Associated Institution (NASU), promised that the labour movement would resist any attempt to allow marketers determine the price of petroleum products.

“What will be the responsibility of the Federal Government if it hands off its interventions in the downstream sector? There’s nowhere in the world where government completely hands the determination of petrol prices to marketers without control,” Adeyemi said.

He asked: “What becomes of the responsibilities of agencies such as the PPPRA and DPR? The creation of PPPRA was a result of our struggles against increment in the prices of petrol, especially between 1999 and 2007, under Olusegun Obasanjo’s administration. We will not sit by and watch the dividends of our struggle fritter away just like that.”

On his part, Israel Aye, Senior Partner, Energy and Commercial Contracts, said to ensure adequate domestic refining of its crude, Nigeria must fully deregulate the downstream sector.

He explained that Nigeria must look inwards for market because of global overcapacity in petroleum refining. “If any country is building a refinery for export purpose, it is difficult to justify such venture. This is because many countries have invested massively in refining capacity around the world. These countries shut down their plants when the prices of crude are low.

“However, in a country like ours that keeps spending massive foreign exchange to buy refined products because we experience supply shortage from time to time, the case for domestic refining has to be anchored on Nigerian market.”

He added: “What Dangote Refinery has done is to acquire an export-free zone license, which allows the firm to produce as if the products are for the export market. Dangote refinery has found a way to exclude itself from the dynamics of the domestic market. Therefore, the company will sell at cost-reflective price to bulk purchasers.

“So, it is either we deregulate and give the people the comfort that allows them sell at cost-reflective price or create an industrial park, which will be exclusively for refining and processing. The Nigerian government must find a way to replicate the Dangote solution, so that investors would be able to sell at cost-reflective price.”

PETROLEUM marketers, however, said the July adjustment of the pump price would help them to regain some of the losses incurred after an over N10 billion setback following the initial price adjustment under the price modulation regime that re-commenced in April.

Major and independent oil marketers had immediately adjusted their pump price, yesterday, for the July retail rate announced by the Petroleum Products Pricing Regulatory Agency (PPPRA).

Justifying their choice of the highest band, the marketers said the market is a free place and members have the right to choose the band that would help them recoup their investment. They noted that even NNPC retail outlets have chosen the highest band

The Zonal Chairman, Independent Petroleum Marketers Association of Nigeria (IPMAN), South West, Dele Tajudeen, told The Guardian that the higher price is not an advantage for marketers, as tank farms, having had prior knowledge of the adjustment, refused to sell products to marketers.He said marketers have had to buy from the NNPC and, if examined properly, operators will have to brace up for an additional cost of N20 per litre when trying to re-stock.

Chairman of the Major Oil Marketers Association of Nigeria (MOMAN), Adetunji Oyebanji, said that for investments to thrive in the industry, operators need stability and proper market assessment.

He decried the losses suffered by marketers as a result of the recent reduction of the pump price of Premium Motoring Spirit (PMS) to N121 from N145 per litre by the Federal Government.

He said the operators lost N10 billion to the adjustment, regretting that the Federal Government only removed subsidy on petrol but failed to deregulate the sector.

MEANWHILE, the Federal Government, yesterday, faulted claims that the quality of fuel sold in the country is low and highly toxic. It also insisted that imported products conform to national standards and parameters set by regulators.

a new report, an international resource watchdog, Stakeholder Democracy Network (SDN), had stated that Nigeria has some of the worst cases of air pollution in the world, with dense clouds of choking soot hanging over gridlocked cities, leading to a rise in serious health conditions and damaged vehicles.

It said laboratory analysis shows that the black market fuel made from stolen oil in rudimentary “bush” refineries in the Niger Delta is less polluting than the highly toxic diesel and petrol Europe exports to Nigeria.But the Department of Petroleum Resources (DPR) said every product coming into the country is properly tested at the terminals before being discharged for local consumption.

“Any product that does not meet national standards would be rejected. This has been the practice over time,” the DPR said through its Head, Public Affairs, Paul Osu.

Also, Dr. Kennie Obateru, Group General Manager (Group Public Affairs Division) of the Nigerian National Petroleum Corporation (NNPC) maintained that products coming into the country are certified by the DPR before they are made available for public consumption.

The chairman, Major Marketers Association of Nigeria (MOMAN), Tunji Oyebanji, said the NNPC has being the major importer of fuel in the country and that marketers have always advocated the need for government to focus on Health, Safety, Environment and Quality (HSEQ) regulations, rather than fixing prices.

“As we have mentioned in the past, full deregulation would bring about competition in terms of product quality, product variety and mode of delivery. But now, we are all dependent on one source because we want the cheapest fuel. We can’t have our cake and eat it,” he added.

The NNPC had, last month, alerted Nigerians on the presence of fake diesel in the market. The DPR, thereafter, said its officials had visited the locations and was waiting for the result of tests on samples.