Nigerians Reject Another Fuel Price Increase | Independent Newspapers Limited
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Nigerians Reject Another Fuel Price Increase

PENGASSAN, fuel price, NNPC
Posted: Sep 11, 2016 at 4:28 am   /   by   /   comments (0)

Petroleum and its by-products are the heart of the Nigerian economy. Indeed whatever happens in the sector has a significant impact in the life of Nigerians and the national economy. The individual Nigerian is the impact of the vagaries in international petroleum economy.

This situation arises because the Nigerian economy is largely dependent on the revenues that come from the export of oil. In fact, more than 80 per cent of the nation’s external receipts come from export of crude oil.

The decline in the prices of crude oil in the international market has left the Nigerian economy grasping for breath; indeed, the Nigerian economy is in recession for the first time in 29 years and all manner of suggestions have been put for as a way out of economic crisis, in which Nigeria has found herself.

One route that different governments in the country have followed in trying to shore up revenue is increase in pump prices of petroleum products and has led to increase in the prices of almost everything and economic hardship on the people. Some groups are on the march again on that road.

Last week, former group managing directors (GMDs) of the Nigerian National Petroleum Corporation (NNPC) called on the federal government to review upward the price of petrol (premium motor spirit) on the argument that the present price cap of N145 per litre is not in line with current economic realities in the country.

According to a statement by the NNPC, the former GMDs stated this at a one-day meeting with Dr. Maikanti Kacalla Baru, the group managing director of the NNPC, and Mr. Ibe Kachikwu, immediate past GMD and current Minister of State for Petroleum Resources, in Abuja.

The former GMDs said the current price cap of N145 per litre is not congruent with the liberalisation policy, especially with the foreign exchange rate and other price determining components such as crude cost, Nigerian Ports Authority (NPA) charges, among others, remaining uncapped.

They, however, commended the NNPC for resolving the fuel supply crisis and urged the corporation to put measures in place that would ensure sustenance of seamless supply of petroleum products nationwide. They also advised that the country’s refineries be rejuvenated using the Original Equipment Manufacturers (OEMs), adding that the refineries must be restructured to operate as an Incorporated Joint venture (IJV) similar to the Nigerian Liquefied Natural Gas (NLNG) model with credible partners having requisite technical and financial capabilities.

The former GMDs called on the current management of the corporation to immediately establish the true financial status of the NNPC and also decide on the most appropriate way for its capitalization. They expressed concerns about the continued dwindling revenue of the NNPC and advised that the corporation should pay attention to its revenue-generating entities such as the Nigerian Petroleum Development Company (NPDC), NNPC Retail and the refineries in order to return the NNPC to high performance, growth and profitability.

The former NNPC GMDs also expressed support for the decision of President Muhammadu Buhari in the area of crude oil exploration activities in the frontier basins, particularly the ongoing efforts in Chad Basin and the Benue Trough, while they advised Baru to pay priority attention to the Chad Basin where promising prospects are recorded.

In addition, the statement said:  “The former GMDs noted that for effective functioning of any National Oil company (NOC), the technical components of the country’s Exploration & Production (E&P) must be integrated as part of the country’s NOC. They, therefore, posited that NAPIMS being the technical component of Nigeria’s E & P, and not just an investment vehicle, must remain with and managed by NNPC. Taking NAPIMS out will make NNPC an ineffective NOC. “The current Petroleum Industry Bill (PIB) which proposed the incorporation of NAPIMS and taking it out of the NNPC will inhibit the effective functioning of the NNPC as a National Oil Company (NOC). “This will make NNPC to operate at a different level compared to its peers in other OPEC member countries. While the former GMDs have no issues with incorporation, they strongly advise against taking NAPIMS out of NNPC.”

Nigerians Kick Against Call For Petrol

Price Increment The call for the increase in prices of petrol has, however, ignited a firestorm in the country. Reacting to the proposal, Senator Aliyu Sabi Abdullahi, the Chairman, Senate Committee on Media and Public Affairs, described the former NNPC bosses as “enemies of Nigeria.”

Abdullahi argued that if the former NNPC bosses had been up to their responsibilities, Nigeria would not be importing refined petrol as she currently does.

“The NNPC as an institution was expected to be the livewire of this nation. As we have all known, refineries that we have in Nigeria have not been functional because if they had been functional and if that institution had been up and doing in tandem with its peers in other countries that have similar resource endowment like ours under the directorship of these former GMDs, we wouldn’t have been in this mess,” the Senator said.

The senator also warned the government against taking the proposal of the ex-NNPC GMDs on-board.

“All the problems we are having are as result of what all these people, who have assembled now to be the wise men and to tell us what should be done.

“They do not have the moral standpoint to even advise us on what to do because they had a hand in it.

“I cannot see how you can solve a problem under the same condition that created it. They are more or less acting as enemies of the people and even the government they are advising.

“As far as I am concerned, maybe they were sent to destroy this government and as far as I am concerned we would not allow it.”

Commenting on the proposal, Mr. Ade Oladiti, an engineer and entrepreneur, said proposed increase in prices of petroleum products by the past GMDs of NNPC represents the height of insensitivity and impunity,” adding that a large majority of Nigerians were already suffering the impact of recession in the country.

Speaking on the suggestion, Mrs. Ada Oyin, a trader and mother of four, said that if there was an increase in the price of petrol, the effect on the economy and Nigerian would be unpleasant and near disastrous. She said that the increase would inflict pain on Nigerians.

Dele Olatunji, an artisan and father of five, told Sunday Independent that what the federal government was doing in the sector would resolve the challenges in the sector. According to him, the solution to the crisis bedevilling the Nigerian petroleum industry lay in the construction of refineries in the country.

He argued that funds earmarked for the import of petroleum product should be pulled and used to build refineries in the country.

However, the executive secretary of Major Oil Marketers Association of Nigeria (MOMAN), Femi Olawore, said they have not been informed about the new proposal, the national president of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Elder Chinedu Okoronkwo, said an upward review of the price is the only way to ensure competition in the system.”

Oil marketers were allegedly said to have indicated intention to increase prices of the petroleum products, citing continued scarcity of foreign exchange to finance importation of the products, as reason.

Also, the past Group Managing Directors of the Corporation had at a one day meeting with Baru said that the current N145 price cap for the price of Premium Motor Spirit was not matching with the current foreign exchange liberalisation policy of the Central Bank of Nigeria.

There is no plan to increase fuel price in Nigeria, the Minister of State for Petroleum, Dr. Ibe Kachikwu said. He was refuting media reports of possible increase in the prices of petroleum products in the country.

Supported by the Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Dr Maikanti Baru, after a closed-door with President Muhammadu Buhari in Abuja, Kachikwu described the reports as untrue.

Pressed on the issue by State House correspondents, he asked, “have you seen any memo to that effect?’’

On his part, Baru said that NNPC has no plan to increase the pump price of petroleum products, stressing that “there is nothing like that.’’

The GMD, however, directed the correspondents to go to the Petroleum Product Pricing and Regulatory Agency (PPPRA) for further clarification on the issue.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, and Group Managing Director of Nigerian National Petroleum Corporation, NNPC, Maikanti Baru, said there was no plan by the Federal Government to hike the price of Premium Motor Spirit, PMS, otherwise known as petrol.

The declaration came on a day Acting Executive Secretary of the Petroleum Products Pricing and Regulatory Agency, PPPRA, Mrs. Sotonye Iyoyo, dismissed calls by former NNPC GMDs that the price of petrol be increased, stressing that the downstream segment of the petroleum industry had already been liberalised.

She also noted that the call of the former NNPC bosses was their personal opinion, which had no bearing on the agency’s price template. The clarification of the minister, NNPC and PPPRA came against the backdrop of calls by former Group Managing Directors of the NNPC that the price of the product be hiked from its present rate of N145 per litre to enable the corporation generate more funds.

But Senate Spokesman, Abdullahi Aliyu Sabi, warned proponents of the new increment in pump price of fuel, saying they must not take the patience of Nigerians over current economic situation in the country for granted. Organised Labour also warned against any further increase in the pump price of fuel, saying it would be total madness to do so as it would be totally unacceptable.

Speaking separately after meeting with President Muhammadu Buhari at the Presidential Villa, Abuja, both Kachikwu and Baru said there was no proposal before the government.

Baru, who was first to emerge from the meeting with the President, told State House correspondents, who pressed him for comments, to contact the Petroleum Products Pricing and Regulatory Agency, PPPRA, for clarifications. But pressed further to speaker as he was exiting the Villa, he simply said “there is nothing like that.”

On his part, Kachikwu first directed reporters back to the GMD of NNPC for answers but told that the GMD was mute on the matter, he said that there was no plan to review the price. “There is no memo to that effect, wait for the GMD,” Kachikwu said.

Speaking on the development in Abuja, Iyoyo said the calls by the former NNPC GMDs was only a recommendation, which was not binding on the agency. She stated further that the call was the personal opinion of the former GMDs, noting that the federal government was not planning any fuel price increase in the coming days.

Also speaking on the issue, Group General Manager, Group Public Affairs Department of the NNPC, Mr. Muhammad Garba-Deen, in an interview, said the corporation did not have the mandate to determine the price of PMS.

Former GMDs Are On Their Own –NNPC

Garba-Deen disclosed that the meeting in which the call was made was a consultative forum, adding that the fact that the NNPC GMD, Mr. Maikanti Baru, was part of the meeting did not mean he shared the same views expressed in the meeting. He added that the agreements reached at the meeting was solely the opinions of the participants and, therefore, not binding on the current management of the NNPC, as well as the Federal Government.

He said:  “The NNPC GMD was in that meeting, and it does not mean he shared their views.  He was the convener of that meeting and he allowed them to express themselves as professionals in the industry.

“He did not want to interfere. And whatever views they expressed was not binding on him and not binding on the government also and in any case, the NNPC does not fix price, it is the duty of the PPPRA.  That is their opinion, whether government would increase price or not, I have no idea.”

He further stated that the decision to increase the price of PMS or any other petroleum product was within the purview of the PPPRA and not within the powers of the NNPC, which is an operator in the industry.

He said:  “The NNPC has no mandate to increase price of petroleum products. It is the mandate of the PPPRA. Only PPPRA has the mandate to increase fuel price and it is under the Ministry of Petroleum, just as the NNPC is also under the Ministry of Petroleum Resources.

“We have nothing to do with price increase. The template we are using today was not developed by the NNPC. It was developed by the PPPRA, and the NNPC is a player in the market just like every other player, like Oando, ExxonMobil, Total and Shell. We do not fix the price.

“As I speak to you now, a lot of people are selling below N145 per litre. So the issue of price hike does not arise, considering where we are coming from and the fact that things are hard. As far as that call to hike PMS price is concerned, it is the opinion of the former GMDs.”

Asked for the real price of PMS, Garba-Deen said:  “I don’t know, because so many variables are normally taken into account in arriving at any price. Foreign exchange is just one of them, because it is not part of our mandate, I cannot comment on it.”

The former GMDs of the NNPC, had at a meeting with the current GMD, called for an upward review of the price of petrol, stating that the present price cap of N145 per litre was not in line with current economic realities.

Present at the meeting, according to the NNPC, was the Minister of State for Petroleum/Immediate Past GMD, Dr. Emmanuel Ibe Kachikwu, represented by the Senior Technical Assistant, Engr. Johnson Awoyomi; HRM Edmund Daukoru, Chief Odoliyi Lolomar, Dr. Thomas M. A. John, Engr. Lawrence Amu, Dr. Jackson Gaius-Obaseki, Engr. Funsho Kupolokun, Engr. Abubakar Lawal Yar’Adua, Dr. Joseph Thlama Dawha and Mr. Maikanti Baru.

Senate Warns Speaking to journalists, in Abuja, the Senate spokesman, Senator Aliyu Sabi Abdullahi, who represents Niger North senatorial district on the platform of the ruling, All Progressives Congress, APC, asked government not to buy the idea of ex-NNPC Group Managing Directors. He insisted that government must be mindful of the activities of the former NNPC bosses, who he noted, were parading themselves as its advisers, saying they might be agents of enemies of the present federal administration, with given tasks to pull down the government.

Sabi, who said the former NNPC helmsmen lacked the capacity to speak the way they did, blamed them for the current nation’s economic woes. According to him, their activities as heads of the NNPC brought the country to its current situation.

He said:  “First and foremost, let me say that these are my personal opinions. I’m not making this submission as spokesman of the Senate, which means the position of the Senate but I’m saying this in my capacity as Senator Aliyu Sabi Abdullahi, who represents the good people of Niger North Senatorial District.

“I read the newspaper report and I was disturbed, worried and I think for all intents and purposes, I’m very much disappointed.

“First and foremost, let’s underpin the issue as follows: I saw it clearly: former Group Managing Directors – almost all of them numbering close to 10 or so. And what came to my mind was that how did we get here?

“The NNPC, as an institution, was expectedly the live wire of this nation. As we have all known, refineries have not been functional because if they were functional and if that institution had been up and doing in tandem with its peers in other countries, we would not be where we are today.

“For crying out loud, all of these former GMDs, can they be said to be free of blame on how we got here?  These refineries have not been working; the corporation itself has not been run transparently to the maximum benefit of Nigerian citizens.

“At least, I knew that it was just in this our change administration that the Minister of State (Petroleum), Ibe Kachikwu, was able to tell Nigerians that the corporation had declared profit now because he has brought his wealth of private sector experience to bear on that corporation.

“Before now, going down the lane through the period of the 16 years misrule of the PDP administration, and even before then, our refineries have not worked.  All the problems we are having is as a result of all these people who are assembled now to be the wise men to tell us what should be done.

Govt Should Not Push Its Luck – Odumakin

Speaking on the issue, National Publicity Secretary of Pan-Yoruba Socio-Economic Organisation, Afenifere, Mr. Yinka Odumakin, said: “Government should not push its luck too far as there is a limit to which you can tax poverty. There shouldn’t be an invitation to the rage of the poor through insensitive policies at this difficult period.”

Labour Warns Against Price Increase

Meanwhile, Organised labour warned against any further increase in the pump price of fuel, saying it would be total madness to do so. Nigeria Labour Congress, NLC, and its Trade Union of Nigeria, TUC, counterpart, insisted Nigerians would not accept any policy that would compound the hardship they had been passing through.

General Secretary of   NLC, Dr. Peter Ozo-Eson, said:  “It is not something that is new. We have said before that this is what would happen. That is what is happening. Once you decide that import regime is what you are going to use and you claim to be deregulating, you are going to find that the demand for foreign exchange to bring in product will weigh heavily on the Naira.

“Therefore, the Naira will continue to lose value and when that happens, you will come back to say the price is not right. That is what is happening. We said it when we were telling Nigerians that it was a wrong policy that they were pursuing.

“Beyond that, it is important to state that Nigerians are already bearing too much hardships and any attempt to again raise the price of fuel, certainly, will not be a good policy to pursue. As far as we are concerned at the Congress, we are opposed to any further increase in fuel price.

“The price that was increased before, we opposed it and we still believe it was wrong. So, to be thinking of a new increase, considering the hardship that Nigerians are going through, we are not going to accept it.”

On its part, TUC in a statement by Bobboi Bala Kaigama and Simeso Amachree, President and Acting Secretary General, TUC, respectively, said it was annoying that the Federal Government was considering another increase, when it was yet to fulfill its promises and agreement reached with organised labour during the protest against the last hike.

The statement read:  “In case the management of the NNPC has forgotten, the economy is in crisis and life has become very difficult for the common man who now can hardly afford two square meals per day. The present minimum wage can no longer purchase a bag of rice.

“Businesses are shutting down leading to millions of job losses, which of course have accentuated increased cases of crime and other vices. If all the members of the NNPC team can offer as recipe to contain this scourge of economic downturn is to hike the price of petroleum products, then they are not fit to manage the sector and should throw in the towel.

“If the country had other sources of forex or produces most of what it imports, the economy would not be what it is now. What stops the government from building more refineries and diversifying the economy? The federal government should maintain some stability of forex, taking into cognisance the fact that Nigeria is an import-dependent country.

“The implication of refining outside the country is enormous; if you are refining outside, you must pay for cost of transportation, insurance and port charges, etc. We just cannot continue to tow the same line.

“The economy is already on its knees, and it is our thinking that the priority of government now should be how to salvage the situation through other creative and resourceful avenues, such as downward review of the cost of governance, creating friendly business environment and jobs, diversifying the economy, setting up an economic team that would creatively fashion out modalities to navigate the stormy waters of recession.

“If persons in government feel our pains as they claim to do, then the news that people are already exchanging their children for bags of rice should prick their conscience.

“The Congress will resist further hike in the price of petrol if that is what it will take to get the government into thinking out of the box.

“We do hope it doesn’t get to that. We urge the government to fulfill its promises for which it set up the joint Government-Labour Committee to determine a new, more economically realistic national minimum wage and proffer ways by which pains of the last increment can be ameliorated.”

Market Fundamentals Still Support N145 Petrol Pump Price – PPPRA

Meanwhile, in dousing the fears being expressed by Nigerians over the suggestion by the past GMDs of the NNPC to further hike the pump price of petrol, the Petroleum Products Pricing Regulatory Agency (PPPRA) and key oil marketers in Nigeria’s downstream petroleum sector have said that the current fundamentals guiding the importation and sale of petrol in the country were still favourable for petrol to be sold within the government-approved pump prices of N135 to N145 per litre.

The PPPRA and marketers which include the Nigerian National Petroleum Corporation (NNPC), Major Oil Marketers Association of Nigeria (MOMAN), and Depot and Petroleum Products Marketers Association (DAPPMA) stated this after an emergency meeting with the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu in Abuja.

The meeting, according to a statement from PPPRA, was convened by Kachikwu as a response to recent news of a possible increase in the pump price of Premium Motor Spirit (PMS).

It was attended by the Group Managing Director of the NNPC, Dr. Maikanti Baru, the Acting Executive Secretary of PPPRA, Mrs. Sotonye Iyoyo, the Acting Executive Secretary of Petroleum Equalisation Fund (PEF), Ahmed Bobboi, as well as the Executive Secretary of MOMAN, Obafemi Olawore, and the Executive Secretary of DAPPMA, Olufemi Adewole.

The statement was however signed by the trio of Iyoyo, Olawore and Adewole, and it stated: “The meeting reviewed the state of the downstream sub-sector, especially as it relates to products supply, distribution, pricing and FOREX sourcing. The meeting also reviewed recent concerns expressed at certain quarters, on the sustainability of the current PMS price band.”

“After exhaustive deliberations, stakeholders present were in the affirmative that the speculation of an imminent upward price review of PMS was unfounded. This position is premised upon the fact that the current market fundamentals, as captured on the PPPRA pricing template for PMS, confirmed that the market is operating within the existing price band of N135-N145 per litre.

“The claim is therefore both unfounded and deceptive, as there is no basis for pricing speculations as being circulated within the last few days,” it added.

The PPPRA from this assured that the country will continue to have an uninterrupted supply and distribution of petroleum products. It said the promise was in line with its overall goal of facilitating a vibrant and robust downstream sector, and that Kachikwu has also assured of the federal government’s continued commitment to the welfare and well-being of all Nigerians.

Former Group Managing Directors of the NNPC had last Saturday stated that the that the price cap of N145/ litre on petrol was not consistent with the liberalisation policy of the government especially with the foreign exchange rate and other price determining components such as crude cost, Nigerian Ports Authority (NPA) charges, remaining uncapped. They thus suggested that the government’s cap on pump price be taken off to allow for market parity.