Petrol Sells For N200/Litre In Lagos In Defiance Of FG’s Price Cap

By AYO OLADIRAN and DAVID ORJI, CLEMENT OGBEMUDIA, EHIME ALEX On Jun 22, 2022

In defiance of the federal government’s price cap, fuel still sells between N180 and N200 in some parts of Lagos state as fuel scarcity bites harder, creating traffic gridlock and crippling business activities

Some fueling stations took advantage of the fuel scarcity which got worse on Tuesday keeping passengers stranded at bus stops as most fueling stations are with long queues, causing traffic gridlock in some parts of the city.

At Total and Mobil fueling stations around Aftomedia and Okokomaiko axis of Lagos, a litre of fuel was sold for between N185 to N200 in adherence to the directives by the Independent Petroleum Marketers Association of Nigeria (IPMAN) that removed the cap on the N165 per litre petrol price.

At the Fadeyi area along Ikorodu road, fuel still sells at N165/ltr to motorists who were seen in a long queue and tried to outwit one another for a limited supply of the product.

In the area, only one of the four fueling stations sells to everyone while another sells only to touts who in turn, sell in Jerry cans to the needy while the other two stations are closed to business.

In Shomolu, fueling stations closed at noon Monday and only a few reopened around 4 pm and closed not long after again.

The scarcity allows a brisk business to the few commercial motorcyclists within the area who has fuel to work. They have now added N100 to every destination.

Buses are scarce and also added N50 to the normal transport fare because they claim fuel is costlier.

In the Bajulaiye area of Bariga in Lagos, many fueling stations did not open except Amigo Energy Resources.

At one of the fueling stations around the Redemption Camp area in Mowe, Ogun State, Temitope Abiodun, one of the fuel attendants of Ardova filling station, said they have not been selling fuel since last week because they ran out of stock.

“I can’t say when we will be selling because we have not been supplied fuel,” she said hesitantly.

In another fueling station beside the Redemption Camp main gate, our correspondent observed that motorists have to tip the fuel attendants with N200 before they could get to buy.

Although the queues were minimal and the pump price on the metre was still at N165, one of the fuel attendants at the Conoil filling station, who gave his name as Abu, however, hinted that the per litre price could change at any moment.

“We will soon increase the (fuel) price. Our manager has not received the instruction from Apapa (the depot where they load fuel) to change the metre price,” he said.

The mild fuel scarcity has, however, brought a compelling situation to commuters who are beginning to feel the pinch as transportation fares have marginally increased.

At a motor park beside the Redemption Camp main gate, where commuters board vehicles to Sagamu, Ibadan and Benin, Onitsha and other destinations, the transportation fare to Ibadan which was formerly below N700 is now over N1,000, while to Sagamu has increased from N200 to N300

Speaking to InsideBusiness correspondent, a motorist, Kunle Adekaye lamented the distortion of business owing to the scarcity which has made it difficult to realise his daily target on Monday.

“We thought fuel scarcity is over in Lagos but we are again struggling for petrol. I couldn’t meet my daily target yesterday because I was unable to get fuel. I packed my bus at Odo – Eran in Iyana Ipaja yesterday afternoon. But I came here today to see if I could get fuel at Okokomaiko but I met a long queue.

“And now they are selling at N200 per litre. We can’t get it and it’s still very high. When am I going to leave here today? he queried.

At Aftomedia, the story was the same at Total filling station with long queues. While motorists are paying as high as N190 per litre.

Also at Romoso filling station at Adaloko and Afromedia, motorists were seen waiting with no station attendant in sight.

A bus driver, Frank Dimkoku decried the lingering fuel scarcity, noting he has not been able to get fuel since Monday.

“The fuel problem started again on Monday. I am tired of this. I just left Total Filling station at Afro bus stop to try Romoso at Adaloko, but still waiting for them to attend to us,” he said.

Meanwhile, the Independent Petroleum Marketers Association of Nigeria (IPMAN) hinged the scarcity on demand outweighing supply, saying that the Nigerian National Petroleum Corporation (NNPC) has failed to supply adequate products.

According to IPMAN, its members can no longer sell premium motor spirit (PMS) at the regulated price due to a hostile business environment.

Speaking in a media briefing, Akin Akinrinade, chairman, of Lagos satellite depot, stated that its members can no longer dispense petrol at filling stations below N180 per litre.

“Our members can no longer sell at N165. There is no reasonable businessman in this business that can sell below N180 per litre,” Akinrinade said.

“We are not on strike rather the business environment has been very hostile to us such that we can no longer do business under this condition.

“For you to load a litre of petrol, you will pay N162 per litre. You will have to add the cost of transportation which is between N6 to N8, depending on the distance within Lagos. If it is outside Lagos, it is much more than that.

“So, If you add N8 to N162, you already have N170 and this product is regulated by the government and the government wants us to sell at N165. We have not added the charges at the depots and the running cost at our stations.”

“You know what diesel says now, and you know how epileptic power supply is, we run on generators using diesel at N800 per litre,” he said.

“There is no station in Lagos or anywhere that uses less than 50 litres per day.”

Despite the scarcity and insistence by IPMAN that selling at a capped price of N165 per litre is not feasible under the current situation, the federal government says the fixed pump price of Premium Motor Spirit (PMS) remains at N165 per litre as stipulated in the petroleum product pricing template.

The government also advised Nigerians against panic buying of PMS, also known as petrol, saying that the country currently had over two billion litres of PMS in various depots according to the trio of Nigerian Midstream and Downstream Petroleum Regulatory Authority, the Nigerian National Petroleum Company Ltd., and the Pipelines and Product Marketing Company after visiting jetties in Apapa, Lagos, on Tuesday.

The depots visited by the top officials of the agencies were NIPCO Depot and TotalEnergies Depot.

The oil marketers had said the price increase was necessitated by the increment in the ex-depot price of PMS by some private depots which they were buying the product from.

However, Ugbugo Ukoha, Executive Director, Distribution Systems, Storage and Retail Infrastructure, NMDPRA, maintained that petrol was a regulated product and urged marketers to comply with the pricing template.

Ukoha said the conflict between Russia and Ukraine had led to an increment in the cost of Automotive Gas Oil (diesel), which was a critical product used in transporting petroleum products from the depots to the retail outlets.

He said: “So when we observed that this poses a big challenge in the movement of other products, we made the representation to the Minister of State for Petroleum and Mr President graciously approved that the freight rate for trucks is increased.

“There’s an N10 addition, which we will apply to the different routes to enable trucks to move to docks easily with less burden.

“With these kinds of efforts from the government, we can only continue to appeal to operators within this industry to play by the rules.

“PMS is a regulated product and the prices are fixed. The ex-depot price is known. The pump price remains N165 and the authority is ever ready to enforce those rules.

“So, we will continue to urge Nigerians to keep within these operating rules.”

Ukoha said the focus of the stakeholders in the next few days would be to close the supply gaps and resolve the ongoing scarcity of petrol as soon as possible.

Also, Adetunji Adeyemi, Group Executive Director, Downstream, NNPC Ltd., said the purpose of the visit to the depots was to get first-hand information on the challenges responsible for the current scarcity.

Adeyemi said despite the challenges globally in terms of the supply chain, NNPC had continued to provide petroleum products, specifically PMS to Nigerians.

“Today we have about 2 billion litres of PMS in-country, which is about 34 days sufficiency. So, there is sufficient petrol in the country.

“We are working with the entire stakeholders and players in the downstream sector to ensure that this product gets to the distribution channels and also the stations.

“We want Nigerians to continue to enjoy the free flow of petroleum products,” he said.

Isiyaku Abdullahi, Managing Director, PPMC, said the company had been supporting transporters and marketers with diesel in form of palliative to ensure the smooth distribution of PMS and ameliorate the suffering of Nigerians.

Abdullahi said three vessels carrying about 60 metric tons of PMS were currently discharging at the Apapa jetty, which would be further transported to Lagos and other parts of the country to restore normalcy.

On their part, Suresh Kumar, Managing Director, NIPCO and Ernest Umunna, Site Manager, TotalEnergies, assured Nigerians of product availability at their depots.

They also promised to carry out 24-hour trucking operations to ensure that the scarcity situation in Lagos was resolved within the next few days.

As both sides continue to argue, Joe Nwakwue, a policy analyst and past chairman, of the Society of Petroleum Engineers Nigeria Council, said there are two sides to the issue at hand.

The supply-side challenge is a global problem occasioned by the Russian-Ukraine war, which is not something Nigeria has control over, he said.

“So, when you get into a war and the major supplier of the product is fighting a war, it affects the supply,” he stressed.

However, the local distribution challenge is what the country can handle, Nwakwue said, noting that this has added to the overhead cost of running a supply-side.

He emphasised that tankers, which distribute petrol, use diesel to move from point to point, noting that the price of diesel is now over N800, which means to move a tanker from depot to station costs more for the same trip.

“The petrol stations are run with diesel, mostly when there is no electricity supply. You know how this (power supply) has been.

“So, if you run a filling station, you have to buy diesel at N800 to operate, pay staff and operate on a fixed margin price that has not changed because the market is not deregulated, what will you do? That is what you see in the queues,” he explained.

According to Nwakwue, a permanent solution could have been that Nigeria had fully deregulated the market before now.

“All the expectations are that if we had done that four or five years ago, by now we would not be depending on importation.

“We will have grown a and developed local refining capacities to levels where we are not subjected to import market prices.

In the interim, he suggested that the government could look towards adding subsidies to diesel.

The diesel market has been fully deregulated, but interim measures could mean you are rolling back that measure, he explained.

“As a policy response from the government, we can add a subsidy on diesel even if we say it is fully deregulated.

“There are ways to do that. Remember that the N800 for diesel includes the cost of services of the federal government agencies, so we can give them (marketers) a six months moratorium.

“Will it help? How much of that N800 goes to the government and its agencies? Can we wave it for now and not give an open-ended waving but put a time frame? Say from this time to that time as we anticipate that the global situation will change,” the former SPE Nigeria Council, asked.

It also meant waving all regulatory fees as an indirect subsidy removal, he said, “We could also say, every six months we review the market, and extend the waver till the prices stabilise.”

Stressing that would never recommend that the government intervene permanently in this regard, he said, “We are getting to that point where the government needs to intervene in the market.

“That intervention needs to be well thought out and designed so that we do not end up with another problem going forward.”

When asked whether Nigeria may not face a similar situation of rising diesel prices if the price of fuel is fully deregulated, he explained that what is happening with the diesel price has nothing to do with deregulation.

“In designing policy, I do not think anybody designs a deregulation policy thinking there would be a war somewhere.

“The prices you see in diesel are driven primarily by the global challenges occasioned by the war. They have nothing to do with the market price,” Nwakwue said.

He maintained that the deregulation of diesel was the right thing to do but external factors such as the COVID-19 and the Russian-Ukraine war crept in and these were not what anybody could have designed.

“So, when they happen, it is now left for the government to assess the need for intervention. When things that are outside contemplation happen, you have to have a policy response. You have to go back and look at your policy tool and see what you can deploy to minimise the impact on your people.

“Deregulation is the right policy, whether it is diesel petrol aviation fuel. But we are in extraordinary times now, so there might be the need for the government to protect the market and its people,” he added.

freight cost Fuel scarcity Independent Petroleum Marketers Association of Nigeria (IPMAN Nigerian Midstream and Downstream Petroleum Regulatory Authority Nigerian National Petroleum Company Ltd.NNPC Pipelines and Product Marketing Company PPMC