By Adewale Sanyaolu
FOR over 10 years, Nigerians have had to contend with the ugly monster of fuel scarcity, which has defied solutions put in place by government and stakeholders.
But, more often than expected, the embarrassing national shame rears its ugly head last December.
Across the country, fuel sold for as much as N250 a liter December of 2015 in some states, due to the inability of marketers to source foreign exchange.
The situation further got worse in May last year, when telecommunications firms-MTN, Airtel and some banks threatened to shut down operations due to scarcity of petroleum products.
As a way out of the current logjam, the National Operations Controller, Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr. Mike Osatuyi, argued that the solution out of the consistent fuel scarcity, was for government to deregulate the downstream sector.
IPMAN is not alone in the call for deregulation of petrol in Nigeria as the International Monetary Fund (IMF), had also called on Nigerian leaders to use the present low price regime to remove fuel subsidy and deregulate fuel prices. The IMF in its updated strategy recommended an automatic price change mechanism that changes price slowly.
Price modulation simply means that government will ensure initial slow price increases by regulating the components of fuel price such as taxes, freight, margins, transport, storage and bridging. The slow fuel price increase will reduce immediate mobilisation and opposition. There will be no direct government regulation of fuel prices. Rather, the marketers and traders will fix the final fuel price. Price modulation fixes the bottom commodity price in a market by tweaking price components. The Petroleum Products Pricing Regulatory Agency (PPPRA), will fix the minimum fuel price and the fuel cabal/marketers can sell at whatever price the customer will pay.
‘‘The ultimate is to deregulate the downstream sector. Let the Federal Government deregulate. We are the stakeholders, we are the players. We know the job. I have been in this job for the past 20 years. The best thing for President Muhammadu Buhari to do is to deregulate the industry now. We don’t need to waste time to queue for fuel for six to 10 hours daily to get fuel.
When former President Olusegun Obasanjo, deregulated the Automated Gas Oil (AGO) otherwise called diesel 14 years ago, have you heard about diesel scarcity ever since? Actually, if it is deregulated, we will have different prices. We cannot have single price across the country.We may end up having 100 different prices.Thia is price modulation. Some can sell N100, N101, N99 or N98.5 per liter which is normal depending on the location, but this is the time to deregulate,’’he said.
Price modulation means that government will ensure initial slow price increases by regulating the components of fuel price such as taxes, freight, margins, transport, storage and bridging. The slow fuel price increase will reduce immediate mobilisation and opposition. There will be no direct government regulation of fuel prices.
Rather, the marketers and traders will fix the final fuel price. Price modulation fixes the bottom commodity price in a market by tweaking price components. The Petroleum Products Pricing Regulatory Agency, PPPRA, will fix the minimum fuel price and the fuel cabal/marketers can sell at whatever price the customer will pay.
On how to further quell scarcity, Osatuyi advocated the sale of refineries that fail to come on stream, adding that the issue of refineries has been a reoccurring one.
Recall that the Minister of State for Petroleum Resources and Group Managing Director of the NNPC, Dr. Ibe Kachikwu, had recently given a 90-day fast-track ultimatum for the revival of the refineries. Four days to the end of the deadline, only one of the refineries (Kaduna) has resumed production.
The nation’s refineries in Warri, Kaduna and Port Harcourt have a combined installed capacity of 445,000 barrels per day.
Osatuyi said, “Refineries that will die will die. The ones that will survive will survive. If the refinery is not working, let them go and sell it as scrap. Dangote is putting up 600,000bpd facility, which will come on stream in 2018, and is more than the combined installed capacity of the four refineries we have. If those refineries cannot survive, let them go and sell them as scrap.
After deregulation, refinery that survives will definitely survive while the one that will die will die. They can even sell them as scraps. The capacity of the refinery is far above the combined capacity of our four refineries that we are talking about. Business is about survival. It is either you survive or you die in business. When this refinery comes on stream, you will see that it can service the whole country or choose to export because it is private, Osatuyi said.
Given further insight, he urged NNPC to sustain its buy now,pay later scheme which it extended to IPMAN members in the face of fuel scarcity.
Under the latest move, NNPC will provide petrol to registered and certified members of IPMAN, deliver the products at their respective retail station, and ensure that, IPMAN monitors that the products are sold are the approved price of N87 per liter.
The current arrangement according to him, has saved IPMAN members the hassles of going to depot to queue for products because NNPC has already taken off the burden of sourcing for products and transporting to the retail stations off them.
And to further ease the scarcity tension,Osatuyi said the management of NNPC under the current direct delivery arrangement has approved a credit scheme, where IPMAN members are given credit lifeline to make payments for products supplied to their retail station three weeks after delivery.
The IPMAN operation controller warned that, under no circumstance should any IPMAN member sell above the approved price because a monitoring team has been set to move round the outlets to ensure compliance and avoid diversion.
According to Osatuyi, IPMAN members control about 84 percent of retail outlets in the country, which put them in good stead to reach every part of Nigeria.
“IPMAN members own and control about 84 per cent of the retail outlets in this country, so now the government is ready to work with us, we too are ready to work with them. If they give us the fuel, we sell it. NNPC can only supply 52 per cent of our national need. I understand and have confirmed that they have stepped up importation to bridge the gap. I believe they will sustain the intervention. If they sustain it, we are ready to sell to the public.”