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MARCH 12, 2007 VOL. 20. NO 22

An Alluring Fantasy

**Funsho Kuplokun, NNPC**

Oil marketers insist on N65 per litre, as depot price of petrol by the Nigeria National Petroleum Corporation (NNPC) remains unchanged
By Oji Odu
Just as normalcy is gradually being experienced in the oil sector due to the availability of petroleum products with its attendant relief on the pressure brought on the populace, the Nigeria National Petroleum Corporation (NNPC) Monday, February 19, 2007, announced a 1.5 per cent cut in the pump price of the Premium Motor Spirit (PMS), otherwise known as petrol from N65 to N64, which did not go down well with both the major and independent marketers of the product.
The corporation said that the one naira cut was a business decision aimed at impacting on the lives of the people, due to the increased returns as a result of high sales of the products since the deregulation of the sector.
Dr Levi Ajuonuma, General Manager, Public Affairs Division of NNPC, reiterated that the price reduction was in acknowledgement of the consumers’ support, patience and understanding, during the trying periods of the organisation especially during recent scarcity period.
The corporation also said that it has put some measures in place to ensure that the dearth of petroleum is history and that pipeline vandalisation would be checked. Ajuonuma: “We have put in place measures to ensure a smooth supply of products, while we address the fundamental issue of pipeline vandalism and its attendant challenges in the product distribution system.
Reacting to the reduction in the petroleum pump price, both the major and independent marketers insist that they would not change their selling prices of the products, as the one naira cut was not realistic.
One of the major marketers who preferred anonymity said: “We have no intention of reducing pump price, we will review the reasons given by the NNPC for the price reduction before deciding on our next line of action. But we strongly doubt if we will follow suit.”
But an independent marketer said that what the NNPC has done shows how unserious they are.
The Source learnt that: “Less than five per cent of the population patronize the NNPC mega stations because they are few in number.
“If they actually wanted the majority of Nigerians to enjoy the price reduction, then they should have reduced the price at which they sell to both majors and independents by one naira so that we can also pass on the benefit.”
In a swift reaction to the price reduction, the Petroleum Products Pricing Regulatory Agency (PPPRA) the body responsible for the fixing of products prices, supported the move by the NNPC describing it as “one of the benefits of competition, occasioned by the fluctuating drop in price of crude at the international market.”
Dr. Oluwole Oluleye, PPPRA Executive Secretary, revealed that the market would experience more reductions as long as the price in the international market continued to fall.
The marketers argued, according to The Source’s findings that, if the agency expects more reduction in pump prices to reflect the fall in the price of crude oil in the international market, it should have taken the initiative to reduce the pump prices of petrol. But according to the Agency’s Pricing Pattern, as at the period of NNPC’s reduction, the price of petrol was N66.43.
Speaking to The Source, an independent marketer who also craved anonymity said, “You see, according to PPPRA’s price template the time NNPC announced the price reduction, the price for petrol was N1.43 more than the N65 depot price and N2.43 above the new price of N64.
How do you expect us to reduce our pump price whereas, we are not sure that the government will not wake up one morning and announce the expected pump price increase?”
But the PPPRA has defended the latest prices for petroleum products saying that the objectives of the pricing template are to ensure transparency, full cost recovery, fairness, responsiveness, efficiency and competitiveness in the distribution of petroleum products
For this reason, he says, it uses the import party principles including the landing cost of products, margins for the marketers, dealers and transporters, jetty-depot through-put, and other charges, and taxes to arrive at the market price for petrol.
Investigations reveal that, compliance by the marketers within the Lagos metropolis to reduce their pump prices was nil, as none of the petrol stations visited has carried out the order.
In one of the petrol stations owned by a major marketer, the manager who does not want his name in print said, “who should be a father Christmas, we or the government? Upon all the levies on us, they want us to lose one naira while they that are in the position to subsidise price have pegged the depot price at N56.71. they have to do more for this to work.”
The Source’s findings also revealed that most of the filling stations sell for fear of incurring the government’s wrath. But some Nigerians who spoke to The Source lauded it as a good development because they say it will go a long way to impact on the economic lives of the people especially if carefully and properly handled.