Aside the debate still raging over petrol subsidy removal, Adeola Yusuf in this report, presents how fuel depots and marketers raked in N4.2 billion extra profits in three days, while selling old stocks at new price.
Confusion last Wednesday rocked the downstream sub-sector of Nigeria’s oil industry as the pump price of premium motor spirit (PMS) also known as petrol soared to as high as N161 per litre.
New Telegraph had earlier, in an exclusive report, revealed the imminent hike in ex-depot price of the product, which led depot owners to embargo payment for all the products loaded last Tuesday.
Confirming the report, the PPMS had on Wednesday, fixed petrol ex-depot price at N151.56 per litre for the month of September. Though it later reduced the ex-depot price to N147.67 per litre, the marketers, who swiftly jerked up their pump prices to N161 per litre, did not reduce the price.
Role swap as basis for confusion
According to the statutes, the right to announce the adjustment in prices of the product is reserved for Petroleum Products Pricing Regulatory Agency (PPPRA), but PPMC had, from August, started announcing the ex-depot pricing, causing confusion in the polity.
The latest announcement, which was conveyed through an internal memo signed by D.O Abalaka and sent to all depot owners, stated that the new price was “effective September 2, 2020.” The memo with ref. number PPMC/IB/LS/020 reads: “Please be informed that a new product price adjustment has been effected on our payment platform.
“To this end, the price of PMS is now N151.56k per litre. This is effective 2nd September, 2020.”
Following the increase in the price PPMS, some fuel depots and retail marketers raked in over N4.2 billion as profit in the first three days of September by selling old stocks to Nigerians at a new price,
New Telegraph investigation revealed. With an average daily profit of N1.4 billion daily, the two major stakeholders in the value chain, checks by New Telegraph showed, took advantage of the controversial announcement of price advisory for September to surge their profit margin.
Statistics of fraud, profiteering
Depot owners who, according to an exclusive report by New Telegraph embargoed payment on petrol loaded by marketers on September 1, made an average of N1.287 billion in two days loading an avarage of 1,500 trucks of 33,000 litres of PMS daily.
Out of these, installations in Lagos Apapa axis alone loaded close to 1200 trucks while depots in Ejigbo, Mosimi, Ibadan and across the country loaded an averahe of 300 trucks. The depots, checks by this newspaper showed, sold their old stocks of N138.56 per/litre at N151.56 and N147.67 per litre raking in an average extra profit of N13 on every litre of petrol loaded.
The retail marketers made the larger volume of the extra profit by selling their old stocks of N148 per litres at N160 per litre for an average of three days, making N12 extra profit on eaxh litre of PMS sold to customers.
It was gathered that N2.914 billion of the total profiteering was made by these marketers at the retail end of the business as some of them with old stocks of N148 per litre lasting for an avarge of three days immediately adjusted their pumps to N160 per litre raking in N12 on every litre of the product in their tanks.
Chairman, Major Oil Marketers Association of Nigeria (MOMAN), Tunji Oyebanji, however, told New Telegraph that while MOMAN welcomes government’s decision to henceforth allow market forces to determine the price of petrol, his group does not dictate the price to members.
Oyebanji, in a statement sent to this newspaper, said: “Prices at the pump will have to be adjusted to reflect realities of the increase of ex-depot prices by PPMC, however the magnitude of the increase, timing and location is a decision left to each company.”
Consistent with global best practices, MOMAN, Oyebanji continued: “Does not dictate prices to it’s members as this would be anti-competition in a fully deregulated market.
“We welcome governments action in allowing the market to determine prices as we believe it will prevent the return of subsidies while allowing operators the opportunity to recover their costs. This will in the long run encourage investment and create jobs. “We all must remember the country is broke and can no longer afford subsidy. There is no provision for it in the budget.
“With this the incentive for smuggling will be reduced.
More funds will be available to the government for investment in infrastructure, roads, health, education and power. Deregulation means that prices will go up and down.”
Speaking further, he said: “They went down in April now they will go up as we are entering the European winter season and demand for refined crude goes up. Already there are indications of more investments in local refining in Nigeria which will moderate the cost. “Fierce competition will also moderate the price. As you can see, not everyone is selling at the same price. So, as things stand we are into full deregulation.”
Echoes from depots
Most of the private depots visited on Wednesday sold at two different ex-depot prices within one hour. While most of them adjusted their prices from N138.56 per litre to N151.56 per litre in the morning, they readjusted the price to N148 per litre before the end of transactions last Wednesday.
While this was ongoing, the Independent Marketers Association of Nigeria (IPMAN) ordered its members to sell the product at N161 per litre at the retail stations.
Profiteering by filling stations
Many filling stations in Lagos and Ogun states, a survey showed, immediately adjusted their pumps to the new price of N160 per litre while others rationed the product to their customers.
Stations like Fowobi, Faith and Marvelous, and Rakaab, all along Itele- Ayobo road, sold the product at N161 per litre. Others like Olawale filling station, Iswat filling station, off Lagos-Abeokuta road, shut their gates, while Enyo filling station at Oju- Oore, Ota, was dispensing the product from just two of the eight pumps/nozzle points.
In Ibadan, marketers sold the product for between N160 and N161 per litre. Fuel marketers had, according to a report by this newspaper on Wednesday, heightened expectation of a marginal increase of up to N150 per litre in price of PMS for the month of September as they began to profiteer over delay in official price advisory for the month.
All the depots loading the product in Apapa, Lagos, Saturday Telegraph gathered on Tuesday, also stopped marketers from paying N138.62 per litre for petrol loaded on the first day of the month.
The ex-depot price of N138.62 per litre was in place for the month of August. Before the latest announcement of N151.56 ex-depot price, depots like MRS, Nipco, Sahara, AA Rano, Rahamaniyya and Aiteo had sent memos to all the third party marketers registered with them to stop payment forthwith.
The Federal Government needs the support and goodwill of the people in carrying out the deregulation and removal of subsidy on petrol to the letter.
The ongoing monthly profiteering is a danger to this goodwill and, in the best interest of all, government should deploy Department of Petroleum Resources (DPR) on depots and marketers to end their monthly profiteering and taking undue advantage of the situation.