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DEREGULATION: MARKETERS SEEK HIGHER MARGINS … MAJORS CRITICIZE AMAECHI'S SUBSIDY

By NBF News
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By Clara Nwachukwu
Petroleum marketers operating in the nation's downstream sector insist that they are not making enough margins as expected under a deregulated regime. If anything, they argued that in actual terms they are getting even much lower margins despite the increase of petrol price from N65 to N141 per litre.

Since the introduction of the new pricing template derived by the Petroleum Products Pricing Regulatory Agency, PPPRA, the marketers have continued to express their disappointment with the current template saying they were better off before.

A development that pushed the PPPRA to call for stakeholders meeting during which it pleaded for marketers understanding and cooperation, even as it prefers that the details of the meeting remained secret. However, Vanguard investigations revealed that the marketers, including the Independent Petroleum Marketers Association of Nigeria, IPMAN, and the Major Oil Marketers Association of Nigeria, MOMAN, are not happy with the current template.

They calculated that the current template slashed their gross margins from 17 percent to a mere seven percent, but also want  some more benefits from their operations seeing as the PPPRA has added new inputs that were not included in the old pricing template.

In actual terms, the marketers claimed they are still entitled to the same N4.60k margin they were getting pre-January 1, pump price increase as opposed to PPPRA claims and have made their position on the matter known to PPPRA.

Last week Tuesday, Vanguard exclusively published the new pricing template for petrol, which some of the cost inputs worry even the organised labour. But PPPRA prefers to keep quiet about the new template and is yet to offer any explanations for them.

The President, Trade Union Congress, TUC, Mr. Peter Esele, in a monitored television programme, wondered why the PPPRA included N5.80k bridging cost into the current template.

The Bridging Fund is being managed by the Petroleum Equalisation (Management) Fund, PEF, headed by Mrs. Olufunke Sharon Kasali, which upon verification reimburse marketers for hauling of petroleum products.

Bridging is used to offset the cost of transporting petroleum products to very far distances in order to maintain uniform pump prices nationwide.

However, experience has shown that apart from the western states and Abuja, petroleum products are not sold at uniform prices. Many analysts have continued to question the relevance and continued existence of the bridging fund, which they argue is another avenue for corruption in the downstream sector.

Besides, under a deregulated system as government claims, there is no need for bridging anymore since market forces are expected to dictate prices.

While the independent marketers reluctantly agree to work with government as it fine tunes the new pricing template, which also fixes a maximum benchmark depot price, the majors, which comprise the big players including Mobil, Total, AP, Oando, MRS, and Conoil, question the essence of the deregulation if the PPPRA continues to fix benchmark prices at the depots and the pumps.

In their opinion, 'What we have here is removal of subsidy to enable government to increase pump price for petrol and not deregulation which is supported by market forces.'

Some of the marketers like the US-based, Mobil and Chevron before it sold its downstream assets do not engage in any of the discussions on pricing because it is against the American anti-trust law.

In another development, major marketers have criticized Rivers State Governor Chibuike Amaechi's palliative, which they referred to as 'another brand of subsidy,' and vowed to raise the issue with the relevant authorities.

Amaechi in a state broadcast last week pegged pump price of petrol in Rivers at N137/L, while also fixing bus fares to various destinations in the state to alleviate the pains of the recent petrol price hikes.

He explained that this followed agreements reached with IPMAN and the National Union of Road Transport Workers, NURTW, to the extent that the state government will pay for the petrol allocations to Rivers, and sell same at reduced to independent marketers to reduce the price of petrol and cost of transportation in the state.