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Fuel price hike through back door?

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Many Nigerians pay more than N145 per litre official price for premium motor spirit (PMS) also known as petrol. Adeola Yusuf reports how the Federal Government’s hide-and-seek game on full deregulation brought price hike in through the back door.

 

 

The National Bureau of Statistics (NBS), in its latest petroleum products price watch for last February did not only show disparity in prices of petrol across the states, it also revealed how the question: “How much is petrol sold in Nigeria?” is difficult to answer.

Yobe, a state in North East Nigeria, the NBS data showed, recorded the highest average petrol price in February, with N177 per litre. Others with sky-rocketing average price were Sokoto, N162.1 and Taraba, N161.7, while Lagos, N144.9; Delta, N144.8 and Osun N144.7 recorded the lowest respectively.

This is despite the official price of N145 per litre displayed conspicuously on the website of Petroleum Products Pricing Regulatory Agecy (PPPRA). Nigeria is Africa’s biggest crude exporter with four government-owned refineries.

Sustainability of N145 per litre

Before the average high price of N149 per litre, Group General Manager, Crude Oil Marketing Department of the NNPC, Mr. Mele Kyari, had earlier hinted that the nation’s difficult business environment may make it difficult to sustain the current pump price of petrol.

He spoke at the 10th Oil Trading and Logistics Africa Downstream Week in Lagos, where he also said it was “impossible to import products at the current market price, at current fixed foreign exchange rate and recover one’s money.” Marketers that are currently selling below N145/ litre, he said, are doing so because they are not the importers of the fuel.

“Because we (NNPC) have taken the heat and you buy from us, you can afford to go to the market and then put a ridiculous price,” he said. However, Kyari ruled out the possibility of increasing the pump price by government due to the economic hardship in the country, saying: “it is impossible for this government to announce tomorrow that petrol is about N150. “This government cannot sustain it,” he said, maintaining that this “is the truth.

The people will not take that number. But that is why the suppliers now are not importing. It is not about the foreign exchange. “We are in subsidy regime absolutely, there is no way you bring product today and take it and sell at N145 and get back your money, and make profit. That is not possible. You can see some marketers saying that fuel is N138.It is because they did not import. Somebody has taken the heat of the price.”

A few weeks before Kyari’s submission, former and present group managing directors of the NNPC had also expressed fears that the current pump price of N145 per litre is no longer feasible.

They said the amount does not correspond with the pricedetermining components of the commodity and the fluctuations of the foreign exchange rate. The NNPC had, in its statement, said: “They (the GMDs) noted that the petrol price of N145/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 charges, etc. remaining uncapped.”

Fixing forex rate issue

On the N145 per litre price, Kyari had said: “We have created a niche market for the forex. We have ring-fenced all forex from the upstream such that those forex will be available at a fixed price; a price that the CBN has agreed. I am part of the people who are involved in making sure that this forex is available.

“I am part of the committee allocating those forex and I know and I can see some of you here; we gave you forex, but you returned it. And the reason that was given was that the forex was not enough to import.

“But the truth is that if you go to the market today and buy products and land here, that you are required to sell it at N145 max. That is the main reason why people are not importing. It is not forex; we have addressed the forex issue.”

N141 to N145 per litre

In the build up to the disparity in prices across the counttry, the NNPC stations, during the last quarter of 2016, increased the pump price of petrol at its retail outlets by N4 from N141 to N145 per litre.

Though the new N145 price remains within the maximum price cap fixed by the Federal Government last May, this is the first time fuel at NNPC’s outlets will be sold at that price.

Hitherto, prices had been hovering between N141 and N143 per litre at NNPC and affiliate stations in major cities and even less at stations in the hinterlands. Group Public Affairs Division of NNPC, however, said in a statement that the N4 per litre price hike by NNPC was interplay of market forces.

He said: “Marketers can sell between N135 and N145 range price regime introduced in May. It is simply an interplay of market forces,” the then Group General in charge of the division, Garba Deen Muhammed, said.

The N145 per litre price at NNPC, a management staff of the corporation said, was to minimise the losses the NNPC will record by the end of the year through its monopoly of importation.”

Already, the revenue losses recorded by the corporation had hit N35.4 billion in two months, as profits woes rocking the corporation worsened. The monthly financial and operations report released on the corporation’s website last September showed that the losses were recorded in July and August. NNPC stated that the force majeure declared by SPDC as a result of vandalised 48-inch Forcados export line was a drag to NPDC, its subsidiary and the overall group performance.
High prices

Prices of petroleum products have remained high across the country. This is notwithstanding the efforts by the NNPC to crash prices through massive importation supported by output increase from the local refineries. The average price paid by consumers for petrol increased by 50.1 per cent year-on-year and 0.7 per cent month-on-month to N149.8 in February 2017 from N148.7 in January 2017.

Like petol, like diesel

It’s not only petrol that is in this high price debacle, the average price paid by consumers for Automotive Gas Oil (AGO) or diesel also increased by 3.68 per cent month-on-month and 68.74 per cent year-on-year to N249.38 last February from N240.52 in January. The highest average price for diesel were, N280 in Adamawa; Ebonyi, N272.5 and Cross River and Borno, 271, while those with the lowest were Oyo, N226.67; Bauchi, N226 and Osun, N220.

January price hike

Petrol price began its upward movement last January, when the price suffered 36 per cent increase. The price increased by 35.7 per cent year-on-year in January, the NBS data entitled: “Premium Motor Spirit (Petrol) Price Watch for January,” showed.

The report stated that petrol increased by 35.7 per cent year-on-year and 1.35 per cent month-on-month to N148.7 in January 2017, from N146.7 in December 2016. It noted that states with the highest average price of petrol were Borno, which sold the product for N164.09, Oyo; N161.00 and Ebonyi N156.47. It said: “States with the lowest average price of petrol were Kogi, which sold at N144.67, Ekiti and Imo, N144.64 and Abuja, which sold at N144.20.’’

The states with lowest average price sold the product below the recommended price of N145. Fuel prices are collected across all the nation’s 774 local governments and the FCT from over 10,000 respondents and locations. The report reflected prices households actually bought fuels together with the prices reportedly sold by the fuel suppliers.

Conclusion

Price disparity is hallmark of full deregulation. The Federal Government, therefore, needs to fully deregulate the product’s market to encourage more participation from the private marketers and end the losses by NNPC.

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Nigeria’s fish deficit hits 2.2m tons

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Despite smuggling and abuse of import quota restrictions, Nigeria is currently facing 2.1 million tons of fish deficit.
The Director of Federal Department of Fishery (FDF), Muazu Mohammed, said this in a chat with New Telegraph in Lagos.
He said that the country still depends on one million tons of fish annually as against the 3.2 million tons demand.

Statistically, the country’s total demand is estimated at 3.2 million tons, while it depends on 1.12 million tons of domestic production from aquaculture, artisanal and industrial fisheries.
The FDF boss added that 80 per cent of fish produced in the country are catfish, while other species account for only 20 per cent.
This newspaper gathered that the restrictions have not yielded any positive result because of abuse of quotas and large scale smuggling.

Fish farmers who spoke with this newspaper noted that some of the local farmers government was trying to protect were already out of the business due to lack of fund and other challenges.
Speaking on the development, President, Fish Processors Association of Nigeria (FPAS), Chief Wole Omole, blamed the deficit on government’s policies, which had created uncertainty in the fishery industry.
He said that some members of the association had been facing challenges of finance, debts and smuggling in the business because government had not done enough to protect their investments.
Already, Omole noted that many of the local fish farmers had closed down their fish farms since they have run into debts.

He said: “Let me say this to you, government is just paying leap service to farmers operating in the industry. Money does not get to real farmers who are willing to expand their fish ponds. Also, fish feeding is very expensive in the country. As I talk to you now, I have diverted from fishing business because the profit is not there and this has to do with the cost of feeding the fish.”
Omole explained that investors were finding it difficult to break even in the business even in the long run.

The FPAS president added that lack of political will by the Federal Government had stifled the growth and development of fishery in the country.
“Look at the importation of frozen chicken and turkey the Federal Government banned, but you still found them in the marketplace,” he noted.
According to him, importation of foreign fish, lack of capital, strong smuggling network and inadequate feeds had crippled the ambition of local farmers to meet national demand. This is why the country is facing such a huge deficit, he said.

Omole blamed government for allowing influx of fish imports into the country despite its import restriction quotas.
Echoing him, the President of Fishery Association of Nigeria (FAN), Rasaq Adefowoju, decried the high rate of smuggling and importation of fish to the country.
He said that without government assistance to local fish farmers, the current fish deficit would continue to widen.

Adefowoju also stressed the need for government to create an enabling environment for local fish farmers operating in the country.
The president added that only the solution was for government to provide a bailout fund or loan for the farmers from the Central Bank of Nigeria (CBN) to enable them embark on massive production at single digit or at six months moratorium.

Adefowoju said: “The problem with us in the association is finance. We have enough local fish farmers in the country that can produce fish but there is no financial assistance from the government.”
It would be recalled that since 2014, when the Federal Government introduced the import restriction, exporters from Norway have been finding it difficult to bring fish into the country due to lack of foreign into the country due to lack of foreign exchange to order for supply.

However, finding revealed that some fish are being smuggled through the neighbouring Cotonou Port to the country by fish merchants.
Last year, the Federal Government complained that about $700 million was spent on importation of fish into the country.

The Minister of Agriculture and Rural Development, Audu Ogbeh, lamented that it was no longer sustainable for government to continue to spend such huge amount of money on fish importation.
Consequently, he said that funds would be made available for research institutes to scale up research work into the local production of other fish species, aside the regular catfish and Tilapia.

The minister said: “We need to start looking inwards to see how Nigeria can produce some of these fishes both for local consumption and then importation. We will also encourage massive investment in artisanal fish production, to meet the protein needs of Nigerians, because it has been discovered that lack of protein in some women have made them to developed fibroid

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Dangote: Businesses, residents lose N86bn daily to Apapa gridlock

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Businesses and residents are losing N86 billion to Apapa-Wharf road gridlock daily, Africa’s richest man and President/CEO, Dangote Group, Alhaji Aliko Dangote, has said.
He stated this in Lagos while condemning the challenges posed by traffic jam and heavy presence of different types of taskforce, including the Customs, on the major route leading to the nation’s largest port.
Dangote, who was on an inspection tour of the on-going reconstruction of N4.3 billion Apapa-Wharf road by AG Dangote recently, stated that businesses and residents are losing 20 times the project’s cost daily.
By calculation, N86 billion is being lost by business owners and residents on daily basis.

He said: “People don’t really understand how much money businesses are losing because of the gridlock here; if you quantify it in billions, it is 20 times the cost of this project every single day.”
Consequently, he urged the Federal Government to move the taskforce, including Customs, away from the route to ease traffic.
The reconstruction of the road that leads to Apapa and Tin Can Island Ports is being undertaken by Dangote Group, Nigerian Flour Mill Limited and the Nigeria Port Authority (NPA), which are together committing N4.34 billion to the project.

Justifying the involvement of his company in sponsoring the project, Managing Director, Flour Mills Limited, Paul Gbadedo, lamented that it has been difficult for businesses and residents of Apapa.
Noting that the economy of Apapa is very huge, he said that businesses cannot see the traffic and road deteriorating without doing something.
He stated that 75 to 80 per cent of imports passed through the Apapa ports, noting that the road is strategic.

Dangote stressed that it did not make any commercial sense for Customs to mount check points outside the wharf after they might have checked and certified goods at the ports.
“If there should be any more checkpoints, they should be at the toll gates, not here where they are obstructing traffic flow,” he said.

Africa’s richest man said he was impressed with the progress and quality of work being done by AG Dangote, the contractor handling the reconstruction of the road.
He also lauded the palliative work going on on Apapa Oshodi Expressway and the Trailer Park being constructed by government off the expressway, pointing out that these were efforts being made to ensure that the access roads to the ports are decongested.

“My impression of this road has changed because AG Dangote is doing a great and excellent work here. You can see the quality of work being done. This is quite impressive. Even in Germany, you cannot see this kind of quality of road. This road can last at least two generations in which case you will be talking about over 60 years. It is so solid that it can take any weight and any traffic,” Dangote said.
“I can assure you that we will double our efforts to complete the project on schedule, that is, latest by the end of June,” he said.

Chief Executive, AG Dangote, Ajif Juma, stated that the company is facing a lot of challenges, citing traffic and gas pipeline as major ones.
“But now we are working hard to ensure we finish on schedule with some of our workers on night shift,” he said.

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CBN to banks: Settle customers’ complaints within 2 weeks

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Deposit Money Banks ( DMBs) and other financial Institutions have been directed by the Central Bank of Nigeria (CBN) to settle customers’ complaints on issues of overcharge, unauthorised deductions and other matters within two weeks.

CBN Head of Complaints management Division, Mr Tajudeen Ahmed, conveyed the Apex Bank’s directive in Abuja. He said the regulator would ensure that bank customers receive redress on issues of excess charges or unauthorised withdrawal.

Ahmed reiterated the CBN’s commitment to eradicating the culture of excess and arbitrary charges. According to him, the CBN has since issued a circular,which could be found on the its website showing all legitimate bank charges. He explained that any charge outside what is contained in the circular was not allowed and should not be charged.

“The Consumer Protection Department issued guidelines to banks dated August 16, 2011, directing all banks and other financial institutions to resolve all customer complaints within two weeks of receipt of that complaint,” he said. “Before the expiration of that complaint, the financial institution is expected to be engaging the customer on a continuous basis to update him or her on the status of the complaint. “If it is not resolved within the deadline given, then such a person is encouraged to draw the attention of Central Bank of Nigeria to find solution to that complaint.”

Ahmed enjoined customers with unresolved complaints to contact the CBN by writing to the Director Consumer Protection Department. He also advised disgruntled bank customers to visit any branch of the CBN closest to them to lay their complaints.

“The CBN continually engages the banks to find out if their conducts and practices are fair to their customers in order to stimulate people’s confidence in the banking system. “Non-adherence to that normally results to regulatory sanctions as the case may be,” he said.

Ahmed faulted banks for setting a limit on ATM withdrawals to get customers to make several withdrawals to cash large sums. “I have also observed and noted this. Don’t forget that at the beginning, it wasn’t like this. Over time, we started having this problem.

“One of the reasons is that the quantum of N500 denomination is much more than that of N1,000 denomination,” he said. “When we approached the banks about these problems, they said that the machines become easily faulty when it is set to dispense up to N30, 000 to N40, 000 units.

“However, CBN has directed that the machines that allow payment of up to N30,000 to N50,000 should be installed. “This is still ongoing. The Banking and Payment Department of the CBN is championing it.” In her remarks, Head, Consumer Protection Department, Mrs Hadija Kasim, admonished bank customers to imbibe cashless policy.

“Let’s not forget that ATM cards can also be used on Point of Sale (POS) terminals. We are encouraging people that unless it is absolutely necessary, they should reduce the carriage of cash. Cashless transactions are more convenient, safer and you will avoid the problem of overcharges,” she said. She advised bank consumers to use bank transfer channels for transactions in cases where sellers do not have POS.

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