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Wednesday, November 6, 2024

Fuel Scarcity Fears Loom Amid Dispute Over Rising Costs, Nigerian Marketers Warn

IPMAN criticises NNPC’s pricing strategy, warns of imminent fuel shortage

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Nigeria’s Independent Petroleum Marketers Association (IPMAN) has sounded the alarm over a potential fuel scarcity, warning that rising petroleum prices and unresolved disputes with the Nigerian National Petroleum Company Limited (NNPCL) could disrupt the country’s fuel supply.

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Speaking to journalists in Ilorin on Friday, IPMAN’s National Public Relations Officer, Alhaji Okanlawon Olanrewaju, expressed concerns that the high costs imposed by the NNPCL on petroleum marketers may trigger another round of fuel shortages, despite already elevated pump prices. Olanrewaju claimed that the NNPCL’s latest pricing policy was unsustainable and could place undue financial pressure on independent marketers, pushing them to the brink of survival.

“The NNPCL is proposing to sell to marketers at N1,010 per litre, which is higher than what it sells at its own retail outlets, even after factoring in transport costs,” said Olanrewaju. “This is a difficult situation. It seems they want to portray us as the bad actors, but we can’t survive under these conditions.”

The IPMAN spokesperson explained that this situation has left marketers in a precarious position. He revealed that members of the association had already paid substantial amounts—upwards of N15 billion—into NNPCL’s accounts months ago for fuel priced at the previous rate of N750 per litre. However, despite the payments, the marketers have yet to receive the product. Olanrewaju said the NNPCL now demands additional payments before the fuel can be released, further compounding the challenges faced by IPMAN members.

Olanrewaju’s remarks highlighted the mounting tensions between IPMAN and the NNPCL, the latter being the sole off-taker of petroleum products from the newly operational Dangote oil refinery. He warned that the impasse could disrupt fuel distribution across Nigeria, potentially leading to widespread fuel scarcity.

“By the time we exhaust the fuel we already have and cannot pick up new products, there will inevitably be scarcity,” Olanrewaju said. He also confirmed that the association’s leadership had instructed its members to halt payments to the NNPCL until a National Executive Council (NEC) meeting scheduled for next Wednesday, where the situation will be discussed. This stand-off is expected to further hinder the availability of fuel in the near future.

The association’s frustrations extend beyond the current pricing dispute. Olanrewaju pointed to the financial burden that many marketers face, having taken out loans with high interest rates to fund their operations. He noted that banks are becoming increasingly difficult to deal with, and the high costs imposed by NNPCL are making it nearly impossible for marketers to turn a profit.

“Economically, what they want us to do doesn’t make sense,” Olanrewaju said. “We source our funds from banks, and the interest rates are climbing. The NNPCL has far better negotiating power with banks than individual marketers do, yet we are the ones being asked to bear the burden.”

Despite the looming crisis, Olanrewaju was adamant that a return to the government’s fuel subsidy regime would not be the solution. He warned that reintroducing subsidies would only distort the progress already made towards deregulation in the downstream oil sector.

“There have been achievements made, and while there may be hitches, the government’s steps towards deregulation are the right ones,” he said. “Real competition in the sector will benefit the economy in the long run, but NNPCL should not be the sole off-taker of Dangote fuel. If the market is opened up, prices will naturally fall.”

Olanrewaju’s comments reflect the wider frustrations felt by Nigeria’s independent fuel marketers, who argue that the current system is preventing them from making long-term business plans. The NNPCL’s monopoly on fuel off-take, combined with inconsistent pricing policies, has made it difficult for marketers to navigate the turbulent market and ensure consistent fuel availability for consumers.

This warning of a potential fuel scarcity is the latest in a series of issues that have rocked Nigeria’s petroleum sector. As the country continues to grapple with inflation, high fuel prices have added pressure on both consumers and businesses. The government’s shift towards full deregulation is viewed as a necessary but painful transition, and independent marketers are at the frontline of its economic impact.

Should the current dispute between IPMAN and the NNPCL escalate further, it could exacerbate fuel shortages and drive up prices even more, placing additional strain on an already fragile economy. As Wednesday’s NEC meeting approaches, all eyes will be on how the association’s leadership responds, and whether a resolution can be reached to avert another fuel crisis in Africa’s largest oil producer.

In the meantime, concerns about the sustainability of Nigeria’s downstream oil sector will continue to grow, with experts warning that without a more transparent and competitive pricing mechanism, the country risks further instability in its fuel supply chain.

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