The Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN) , Mr. Clement Isong, has lamented low distribution inspite of its huge investment in the oil and gas industry.
He spoke at a virtual media workshop organised by the MOMAN where he said the backbone of distribution is based on diesel, from transport (vessels and trucks) to energy costs (depots and stations).
This, he said, affects not just petrol distribution but also the distribution of aviation fuel.
He added: “Total distribution margin under the current PMS pricing template accounts for 11.5 per cent of the PMS pump price despite significant increase in costs. Operators are struggling along the supply chain to get petrol out of the nuzzles into the cars, which is difficult to sustain.”
Mr James Gooder,Vice President, Crude and African Markets, Argus Media, United Kingdom, implored the Federal Government to remove subsidy on Premium Motor Spirit (PMS), petrol, in order to discourage smuggling of the product across Nigeria’s borders.
According to him, the raging war between Russia and Ukraine had led to a surge in crude oil prices at the international market with Brent Crude currently trading at over 120 dollars per barrel.
The landing cost of Premium Motors Spirit, also known as petrol is currently above N400 per litre,while the government is spending huge amounts subsidising the product to retail at N165 per litre,he said .
He added: “Capped retail prices for PMS may be popular, or even expected, among those that can afford to own car.But current delivered prices for PMS are around three times as high as the pump price. Is this sustainable? Is financing this the best use of Nigerian taxpayers’ money?
“There is an unfortunate but clear incentive to smuggle subsidised fuel out of Nigeria to neighbouring countries where retail prices are higher.”
He lamented that Nigeria and it’s West African neighbours lacked sufficient regional refining capacity and imported majority of their PMS from Europe.
He said in a global market, product flows are directed by price, stressing that Nigeria is competing with other destinations for products.
He added that even if Nigeria had sufficient refining capacity with the coming on stream of the 650,000BPD Dangote Refinery and others, it would still be in a competitive market and exposed to import parity prices.
Government, he advised, should engage the media and the citizens on the need to allow market forces to determine the price of petrol in the country.
He also implored government to improve public transport and attract investment for infrastructure – whether refining or storage and distribution.
Gooder, however, noted that the crude oil market was volatile and unpredictable, stressing that the measures were only aimed at mitigating its impact on the ordinary citizens.
He explained that the increase in prices of diesel and aviation fuel was higher than the increase in petrol prices globally because the supply of diesel and aviation fuel (middle distillates) was mainly from Russian refineries, which were currently under sanctions.
Gooder said petrol was from Northwestern Europe refineries, which was readily available.
He advised the Nigerian government to ensure that the right pricing benchmark was used to import PMS from Europe.
“In Europe, the Argus Eurobob daily price is the primary PMS benchmark – ‘the Brent of gasoline.’80-90 per cent of Nigeria’s gasoline imports are priced on Argus Eurobob along the supply chain.Argus publishes prices in all other source regions for comparison, as well as delivered to Nigeria. The price used for delivery into Nigeria is still often 95 RON – leading to price distortions.
SOURCE: independent.ng