The Managing Director, Realink Oil Nigeria Limited and Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Mr Ukadike Chinedu, speaks about oil sector issues, in this interview with OKECHUKWU NNODIM
What were some of the issues raised at the recent Central Working Committee meeting of IPMAN?
It was about the emerging trends in the downstream oil sector as it relates to the supply of petroleum products. We had a CWC meeting in Abuja where stakeholders, board of trustee members of IPMAN, the National President, Sanusi Fari, and some zonal/unit officers of our depots came around to look at the trends in the oil and gas industry and how it affects independent marketers. We were able to look at some of the policies in the sector. One of them was the issue of e-payment that was introduced by the Pipelines Product Marketing Company and the challenges therein. We also looked at the issue of buying products from other private depots, the prices and profiteering in that section and the non-increase in petrol sales to independent marketers when we buy at N161 per litre from depots.
You know that the Federal Government’s benchmark for petrol sale at filling stations is between N163 and N165 per litre. So, it is unethical for independent marketers to sell above N170 per litre since the Federal Government has not officially increased pump price.
You mentioned the e-payment method introduced by the PPMC; can you shed more light on it?
The Federal Government, through the PPMC, introduced an e-payment method that requires marketers to upload their documents to the PPMC to be able to load products through an online request. So, petroleum products are no longer purchased through the depot managers like we used to have before. It is now done online. But at this point in time, the policy – not that it was so sudden – came when there was no adequate sensitisation about it to independent marketers. So, when the policy came into effect, it took oil marketers unaware, although some of us are now operating based on the policy. However, at our recent meeting, the council agreed that oil marketers should still go online to register and purchase their products. It was also stated that the Nigerian National Petroleum Corporation should look at strategic stations that are not yet online and give them products, while the outlets work towards making purchases online.
This is necessary in order to stop scarcity in the distribution of petroleum products. This was why you saw clusters of vehicles in some filling stations recently, an indication that the system is trying to adjust to the new policy. However, since the spokesperson of the NNPC said they have products that would last for about 40-day, let’s see how it goes. I say this because many times the NNPC would say they have products while some of us will not be able to access the products through the NNPC depots.
Let me give you an instance, at Port Harcourt refinery, about 90 trucks will converge in a day and only about 20 will load. That volume is not sufficient enough to take care of Port Harcourt main town, much less the sub-regions. And may I let you know that the Port Harcourt refinery does not only feed Rivers State; it feeds Aba, Owerri, Uyo, etc., because it is a major refinery depot. So, when we don’t get up to 20 trucks to feed our stations, the situation will increase tension in the suburbs, whereby people will run into the cities to start queuing for petrol.
Are you expecting any price schedule for petrol, going by the cost of the commodity in private depots?
The PPMC did not come out with any price schedule for February and this made some tank farms to withhold the sales of petroleum products to marketers because they didn’t know whether petrol price will be increased or decreased. But definitely, it is going to be increased. So, when it is increased, they will make more money, leading to profiteering. And because of this, they are not willing to sell products to independent marketers. That is why you now find out that the trucks of most independent marketers have been parked in some private depots for a very long time.
Also, it might interest you to know that these private tank farms that are making the business monopolistic also have their own outlets and are now loading products to their stations. At times, they will load up to 50 trucks to their stations, leaving out the independent marketers. So, it is now forcing independent marketers to be dependent on tank farm owners. Our PPMC depots are meant to checkmate these tank farm owners but we don’t understand what PPMC is doing. When you buy products from tank farms at N160/N161 and you expect us to sell at N163/N165, then we are no longer in business. There is a cost of transportation, rent, salaries, manpower, energy, security, other logistics, and many more, which are factored into the pump price of petrol. So, in the real sense of doing business, no marketer will buy the product at N161 and go back to their filling stations to sell at N163 per litre.
Although we are service-oriented, we are not funded by the Federal Government, and this is a very serious issue. So, the issue of pricing is what is giving us a problem in this country.
How can this pricing issue be addressed?
The council, in our last meeting, agreed that the Federal Government should implement full deregulation of the downstream oil sector. Let the forces of demand and supply determine the price of petrol. I also know that the Federal Government has a running battle with labour on this, but labour should understand what is trending now. They should know that the foreign exchange rate for petrol imports is huge. They should look at it and help in reducing the tension already created in the industry.
How can the country’s refineries help in this regard?
I believe that the Federal Government should sign an executive order to the managing directors of the three refineries, mandating them to deliver the refineries within three to six months or be ready to leave. The Port Harcourt refinery, for instance, is dispensing imported products rather than products refined at the facility. The Port Harcourt refinery is not working, and I’m aware that the Minister of State for Petroleum Resources, Timipre Sylva, once made a visit to the facility after he was sworn in.
He promised that he was going to return the Port Harcourt refinery to about 60 or 70 per cent capacity. The refineries run at a loss to the detriment of the Federal Government. So, my advice is that government should declare a state of emergency on our three refineries to ensure that there is a serious turnaround. It should also ensure that the refineries are producing. Since we have crude oil here, what is our business with the rate of dollar in the international market as regards petroleum products imports? Even if we have a business with dollar rate, what is our business with freight charges? The logistics of bringing in petroleum products into Nigeria is almost higher than the cost of the crude, and that is why we are suffering.
So, if we are able to address that and reinvest the funds on roads and other infrastructure, I don’t think Nigeria should sell petrol above N70 or N90 per litre. The government should also ensure that those who got licenses to build refineries actually do so. We only hear of Dangote Refinery, while there are about six of them who got licences. The modular refineries should also be allowed to work in order to decongest some of our depots and slow down this issue of importing petroleum products.
Are you suggesting that the refineries be given to concessionaires or outright sale?
I prefer privatisation. Indorama Petrochemical Company was in an obsolete position before it was sold to the Indorama management. Today, that petrochemical company is doing above 101 per cent than where it used to be before. The factory is working fine now. So, such should be done to our refineries. They should be sold outright. Government should not have any business in running the refineries.