Oil marketers have declared that the Dangote Petroleum Refinery and others in Nigeria may raise the pump price of petrol to N1,500 per litre once there is an outright ban on fuel importation.
While the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria, Chinedu Udadike, affirmed this, the Petroleum Products Retail Outlet Owners Association of Nigeria said PETROAN could not predict any price, but stressed that there will be a surge in price if the Federal Government stops fuel importation.
However, officials of the Dangote refinery dismissed the projection, saying the marketers made the claims to justify their intention to continue importing “substandard” fuel.
The PUNCH reports that the marketers spoke amid concerns that President Bola Tinubu might ban fuel importation as part of his ‘Nigeria First Policy’, which ordered government agencies to stop the importation of products that can be produced locally.
With the 650,000 barrels per day Dangote refinery and other modular refineries coming on stream, there are speculations that the Federal Government might end fuel importation, which is now about 14.7 million litres per day.
Also, the fact that the Dangote refinery dragged the Nigerian Midstream and Downstream Petroleum Regulatory Authority to court, alongside other players in the industry, is a source of concern to importers, depot owners, and marketers.
As a result, the stakeholders voiced out, saying the Dangote refinery does not have the capacity to meet local demand. But Dangote refuted the claim, saying it has enough to satisfy local consumption and export to other countries.
Speaking in an interview with our correspondent, Ukadike argued that importation is necessary to check the local refiners and prevent profiteering. The IPMAN spokesperson argued that even the modular refineries producing diesel still sell at prices higher than the prices offered by the importers.
According to Ukadike, the rumour that Tinubu may ban fuel imports was not welcomed by IPMAN, asking the President not to consider such a move.
He noted that importers were the only hope of the nation at a time when there were no functioning refineries in the country, saying it was pertinent to allow them to continue their businesses to check domestic fuel prices.
Ukadike warned that refiners might resort to extortion if there are no alternatives from other sources.
“Importation has been long there, and it has been sustaining us. Now that we have the Dangote refinery that has been producing petroleum products and the NNPC that has been struggling to see whether they can produce one keg of petrol for this country, it is also pertinent to allow importation to check the domestic prices of fuel in this country.
“We won’t want refiners to start extorting Nigerians because there are no more imports. Sometimes, import helps to regulate the prices of petroleum products. You will also agree with me that the modular refineries producing diesel are not selling it cheaper than the imported one. I will appeal to Mr President to allow the importation of petroleum products,” he explained.
Ukadike said fuel importers will stop importing once they notice that the local price is lower than the cost of imported fuel.
“It is the factor of price that will ban importation. If the prices of local fuel are cheap, the marketers will buy, and importers will ban themselves from importing. Allow the importers to look at the indices of the market and see when local refineries are becoming exploitative. Once you ban them from importing, Dangote will raise its PMS to N1,500, and this is not good for Nigerians,” he stated.
Instead of banning importation, Ukadike urged the government to support local refiners with financing, tax waivers, reduction in interest rates, and other incentives that could make them exporters of petroleum products.
“We, the independent marketers, don’t encourage the banning of petroleum products imports. Let the government give aid and support to our local refineries and manufacturers. Look at the taxes, look at the bank charges to ensure their prices are good for export, not only for internal consumption. The government can give a mandate to local refineries to export petroleum products after meeting domestic consumption,” he noted.
PETROAN agrees
Meanwhile, the National President of the Petroleum Products Retail Outlet Owners Association of Nigeria, Billy Gillis-Harry, agreed with IPMAN that petrol prices could surge without importation, saying the current price reductions by the refinery were artificial.
While saying PETROAN would not speculate on any price, Gillis-Harry warned that the country should not allow only one source of securing its energy needs.
According to him, banning fuel importation is against the Petroleum Industry Act, which created an open market for all players.
“There will be price surges if fuel importation is banned. Even these price reductions, as far as we are concerned, are artificial. And if there are no empirical values to give us any clear-cut financial engineering that will give us the prices we see in the market, it means something is wrong and something will be wrong in the future, too.
“So, the authorities need to do quite a lot. The Federal Competition and Consumer Protection Commission should also do quite a lot to check everything and make sure that the industry is stable,” he said.
When he was reminded that the Dangote refinery had boasted that it could supply fuel to the nation and export to other countries, Gillis-Harry replied, “I’m a businessman. When you ask me what my capacity is or what I do, I will not tell you that it’s not possible. But the taste of the food is in the eating.
“We stopped importation from November for six months. What was the result? And today, we have a situation where somebody just wakes up to increase the fuel price or reduce it. How does that work? We need to find a different way to work. The size of the product that’s needed is big, now, we are fluctuating between 46, 47, and 48 million litres a day. So, where’s the production capacity in the country that’s doing that? Even if it can be done on the first 100 per cent of production, how long can it be sustained? So, the thing is, at this point, I don’t think anybody should be bothering about trying to create a kind of panic in the system.
“What we should do is, everybody should do their bit. All refiners should refine their products, storage facility owners should continue to give the best service to Nigerians, and make sure that we have products at affordable prices, not prices that are engineered to suit a need or appetite. Let the logistics companies, NARTO, NUPENG, PTD, and others do their work. That way, the entire value chain is busy. Nigerians will be better for it. The economy will be more robust and taxes will be paid from all sectors.”
Asked what his reaction would be if the court grants Dangote’s request to stop fuel importation, the PETROAN boss said the court will base its judgment on the provisions of the law.
“What will be the basis on which the court is working? Nigeria is operated by our constitution and laws. There is a law that guides everything we’re doing in this country, and the court’s job is simply to interpret it properly, not by assumption. We have a business law that should make us very disciplined. So, we should be able to get that working. If the laws are working, we should refer to all the extant laws.
“Doesn’t that decision to go to court tell you that something is wrong? Why would you control somebody else’s business? That in itself signals the present danger. Let us not speculate. The facts are clear that everybody is entitled to do business, provided they are qualified.
“And these licences don’t come cheap; they’re very expensive. So, when you go around and then qualify for it, and somebody says, Oh, stop! Is that good?” he asked.
Dangote counters dealers
However, the Dangote refinery refuted the assumption that it would raise petrol price to N1,500 a litre if there is a halt on fuel importation. It argued that the marketers said this so as to continue the importation of low-quality fuels.
A top official of the refinery, who spoke to our correspondent in confidence due to the lack of authorisation to speak on the matter, said there was no logic in the claim that prices would just be hiked from N890 to N1,500.
“That is the marketers’ wish. They want to keep importing substandard and dirty fuel. There’s nothing like that,” the source said.
Another Dangote official said the refinery was built to make life better for Nigerians and not for profiteering. He emphasised that the refinery can meet local demands and send more to other countries.
He explained that prices are determined by crude oil cost and the exchange rate, not by mere speculations.
Earlier, the Crude Oil Refiners Association of Nigeria said the naira-for-crude deal will prompt a reduction in fuel prices.
CORAN spokesperson, Eche Idoko, said with the naira-for-crude deal and the crash in crude prices, petrol prices could drop below N700 per litre or N350 if crude crashes to $50 per barrel.
Meanwhile, the Director of the Centre for Promotion of Private Enterprise, Dr Muda Yusuf, disagreed with claims that the recently approved procurement policy could enable a monopoly over petroleum products importers, particularly from the Dangote refinery.
He argued that any fear of a monopoly may arise from downstream sector players categorising the Nigerian National Petroleum Company Limited as one of the government Ministries, Departments, and Agencies with procurement powers.
Yusuf queried, “What has the importation of oil got to do with government procurement? Well, maybe the NNPC people are seeing themselves as one of the government MDAs.”
He urged players in the downstream sector to allay their fears by working to set up extra refineries while maximising the four NNPC-operated refineries, especially those in Warri and Port Harcourt.
“If they want to compete with the Dangote refinery, they should go and set up their own refinery. What the government is saying is that whatever we are producing, if it is sufficient, don’t go and import it. So, if they don’t want a monopoly, let all the other refineries work. NNPC has four refineries. If they are not able to refine, whose fault is that?” he asked.
Yusuf further argued that the claims of a monopoly appear improbable because of the absence of a level playing field between importers of petroleum products and local refiners.
“There is no level playing field. Imported fuel and fuel that is locally produced are not the same thing. There is no fair competition because, for the person importing petroleum products, the environment is different, the cost of production is different, the regulatory environment is different, and maybe the quality itself is different. When we are talking about competition, it has to be somebody producing locally, competing with another person producing locally,” he stressed.
(punch)
