Uncertainty is dogging in
the supply of petroleum products for local consumption as some banks overseas
have suspended short and medium-term credit lines to their Nigerian
counterparts due to the inability of marketers to pay matured foreign currency
obligations of over $950 million.
It was learnt at the
weekend that unless the Federal Government intervened in the payment of the
money, marketers would have no choice but to continue to rely on the Nigerian
National Petroleum Corporation (NNPC) for supply which they have always claimed
to be inadequate.
This has led to fears that,should NNPC face any difficulties in fuel importation, the country may
encounter another round of scarcity of petroleum products.
A marketer who spoke with
The Guardian in confidence said a majority of them could not import petroleum
products, as the banks are waiting for the foreign currency obligations to be
cleared before giving another opportunity to marketers.
According to the source, the
marketers are, therefore, left with no option than to depend heavily on
NNPC.Speaking on the current challenges facing the downstream sector at a forum
organised by the Lagos Chamber of Commerce (LCCI), Petroleum Downstream Group,
the Chairman and Chief Executive Officer, Integrated Oil and Gas, Captain
Emmanuel Iheanacho, said in spite of the various reform measures which have
been suggested to achieve a more efficient petroleum products market structure,
there was no escaping the fact that as things stood, nothing could work unless
marketers had ready access to foreign exchange within a well-defined,
well-organised market.
According to him, there can
be no solution which is separable from the “need to urgently restructure the
nation’s economy so that Nigeria can very rapidly become a net exporter of
consumer goods rather that the forex guzzling net importer of goods that the
country currently is.”
Iheanacho expressed
reservations about the Petroleum Equalizing Fund (PEF) payments, which he
described as unnecessary tax on trade that will ultimately be borne by the
products’ consumers.
“As PEF payments are not
chargeable against any particular logistic services rendered, they should be
discontinued in the light of the need to minimize the market price of the
products to which they relate,” he said.
He also stressed the need
for the Pipelines and Products Marketing Company (PPMC) to reduce its
involvement in the trade and to gear itself to intervene only occasionally with
stabilising supply volumes.
“We observe that a
government marketing agency may not be in a position to match the capacity of
independent marketers in the logistics management, competitive cost and product
pricing of products supplied to the Nigerian market.
The PPMC may well apply
itself to working in close co-operation with the independent marketers to
ensure the adequacy and regularity of product supplies to the market at the
most competitive prices,” he said.
Iheanacho noted that the
continued issuance of cargo allocation letters in a deregulated market seems
somewhat odd, contradictory and illogical and that potential suppliers should
be able to import cargoes at their discretion subject to compliance with cargo
quality and safety guidelines as has been historically issued and enforced by
the Department of Petroleum Resources (DPR).
Speaking also, the President
of LCCI, Nike Akande, stated that the sustained decline in global oil prices
since 2014 has put the nation in a difficult position and consequently led to
various fiscal and economic challenges such as the drop in foreign earnings and
reserves, financial bailout for many state governments and unstable business
environment.
“There have been several
discussions about reforms in this sector. The good news is that remarkable
progress has been made with the recent pricing reforms. The state of the sector
has a significant bearing on the economy because we need energy to power this
economy. It could also be a major driver of economic diversification efforts,”
she added.
Credit: The Guardian
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