The Independent Petroleum Marketers Association of Nigeria (IPMAN) has warned Nigerians that unless the federal government prevails on the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to pay its members’ outstanding bridging claims totaling more than N500 billion, the country will face the worst fuel crisis in decades.
Bashir Danmalam, the IPMAN chairman in Kano state, made the comment while speaking at a news conference in Kano yesterday.
This comes as stakeholders decided yesterday to make six million litres of jet fuel accessible to operators at the rate of N480 through the intervention of CBN governor Godwin Emefiele.
The meeting was presided over by the speaker of the House of Representatives, Femi Gbajabimila, and had in attendance the President of the Airline Operators Association, Alhaji Abdulmunaf Yunusa, its vice, Barrister Allen Onyema, managing director of the Nigeria National Petroleum Corporation (NNPC), Mele Kyari, and the Central Bank governor, Godwin Emefiele, among other aviation stakeholders.
However, the IPMAN chairman stated that the NMDPRA’s inability to pay the bridging claims, also known as transportation claims, had put many of its members out of business because they couldn’t carry the commodities due to high diesel prices.
He complained that the agency’s failure to pay claims for over eight months had ruined the businesses of many of its members as they couldn’t not transport the commodity even though it is available.
“NMDPRA is responsible for the payment of bridging claims otherwise known as transportation claims.
“Failure of the NMDPRA to pay the outstanding claims for about nine months, many marketers cannot transporting the product because their funds are not being paid. Despite the high price of diesel, they manage to supply the petroleum products nationwide.
“The resurfacing of fuel queues in Abuja is just a tip of the iceberg with regard to the petroleum scarcity.
“Out of 100 per cent, only five per cent of the marketers can supply the petroleum products because of the failure of NMDPRA to pay the them.
He noted that since after the amalgamation of DPR, PEF and PPRA to NMDPRA, the agency had paid them only two times.
Danmalam, therefore, called on the federal government to intervene before the situation degenerated into a serious problem fuel crisis and spread to other parts of the country.
“As leaders, we have to come out to say the truth because our members are suffering from the failure of the agency to pay the fund. This Petroleum Equalisation Fund is our own money we contribute to each litre. This Agency is doing more harm than good to us,” Danmalam said.
He said Nigerians should not to blame their members for the fuel scarcity but rather should blame NMDPRA.
“We are not agitating for a transportation fee increase, we are only clamouring for payment of our bridging claims that is over N500 billion,” he added.
Meanwhile, after the heated meeting that lasted almost three hours in the National Assembly, it was resolved that shutting down of service should not just be suspended but completely called off.
This followed the resolution that as a short term measure to address the challenge, the airline operators should select three marketers, which the NNPC would work with to supply jet fuel at a comfortable price for them in the next three months.
As a long term measure they resolved the operators begin the process of application for your their license to import jet fuel directly for their operations.
The speaker, however, stressed that in the process of application for license, the relevant authority should as much as possible grant waivers that would not touch on the security and safety of the process.
The House Committee chairmen on Aviation and Downstream were mandated to follow up the process.
Gbajabiamila said shutting down airline operations has the potential of shutting down the government, hence the need to address the matter once and for all.
But Kyari said that there was an agreement to sell the products at the rate of N500 for three days, pending when a pricing formula would be arrived at.
“We agreed that we make the marketers sell the product to them at N500 for three days pending the day they would sit down and agree on this pricing formula. I confirm that between us the and downstream authority they had sat down and engaged and agreed on a pricing structure.
“Needless to say there is no fixed price. This is a deregulated product. So you cannot hold unto any price and indeed what you have seen in the media is N700 reference point. It cannot be a reference point. It depends on the market condition. It can higher than N700 depending on the market. This markets shifts. As we speak it is closely related to the price of crude oil.
“There is no way the oil matters, I am speaking for them now, if you own me N1 billion. I would not give you credit. No one would do this. There are limits to credits. It is an understanding customers.
“It is our role to ensure we intervene. We did. We brought in products so that we can dampen the price. In March and April, we brought in cargo and made it available to the entire industry at N460. there is a build up to that price. When the customer takes marine N435, he has to transport, he has to charter vessel, bring it to his depot, to his furl station and transport it. So there cannot be two same price in Lagos and Maiduguri,” he said.
Kyari added that the government could not fix price of jet fuel since it’s a deregulated product.
“We cannot fix price. We cannot ask for N500. we cannot say it must be below N600 or N700. that is why we insisted they go and have a formula that is transparent that each one of us can see. The only way we can have fixed price is if we put subsidy on. You can say it can sell for N500 in any circumstance, then somebody has paid for that difference. I am not sure this is what we are doing.”
The CBN governor, Emefiele in his own intervention said “There is an forecx constraint. There is limit to what theCBN can provide. We are constrained because we are not able to produce dollar because of the dearth of oil in the Nigera Delta. This is the reality. So we do not have. That means customers must source for forex from alternative sources.
He, however insisted that the CBN cannot grant any concession since it doesn’t have forex to see.
“The availability of forex is very important and the issue of constraint from it arising from issues bordering on theft in the Niger Delta is a big issue. It is when NNPC is able to export that dollars can come in. We do not have forex to sell. It would difficult for us to grant any concession. It means we would be taking a hit or we would be providing some sort of subsidy for the industry.”
Onyeama had large yes that the operators were at the last meeting assured at that that the aviation would be sold to us at N500 which was still in the high side.
“We protested that it was still on the high side because even when fuel was selling at N200 or N250, the operating cost was about 40 per cent and worldwide it is like that.
“It rose to N400 and and N450 and that was when we were alarmed and you noticed that everybody tweaked his inventory when we now raised our base fare to about N50, 000 which did not actually address the ,matter. That was when it was N400. we were invited to the House and when we came here, it was reached that they would give us fuel at N500 within three days. That never happened. We continued writing and nothing happened.
“Much later we were invited by the midstream and downstream authority and we were told that the president approved 25, 000 metric tonnes for us as a palliative to help us. We were very grateful to the president. It was not free. We were happy. We were told to nominate marketers that would market this product for us. We were told to have meeting with these marketers. We called all the marketers. We held meeting with them. We decided the logistics, so they would take their logistical costs and everything and at teh end of the day that fuel was getting to them, they told us at N335, so we put everything together and it would be getting to less than N400 for the cost and we said even if they sell to us at N450 it would be okay,” he said.
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