Supply and distribution of premium motor spirit (PMS), commonly known as petrol, has risen by 50 percent over the past four months, according to federal government statistics.
But the growth has been mostly fuelled by a corresponding increase in rate of smuggling of the products across the country borders than consumption in the country, TheCable Petrobarometer understands.
According to statistics released by the ministry of petroleum resources, the daily supply of petrol rose from 24.15 million litres in September 2017 to 27.06 million litres in October, then 31.27 million litres in November before hitting all-time high of 36.7 million litres in December.
However, despite the increase in supply, which, according to the Nigerian National Petroleum Corporation (NNPC), was targeted at building a healthy stock ahead of the last Yuletide period (it put self-sufficiency level at 30-day stock in November, 2017), the country was hit by crippling shortages of petrol that lasted through December and early in January this year.
Although the supply situation has eased in Lagos and other parts of the south-west, scarcity persists in other parts of the country.
The situation has set the ministry of petroleum resources, NNPC and petroleum products marketing companies thinking, and after several meetings to review the situation and consider the way forward, one dominant factor the current scarcity was pinned on was the increasing level of product diversion, or more directly smuggling.
“Although there was drop in importation around September/October (2017) after private marketers stopped importing and NNPC became the sole importer of the PMS, still the situation was worsened by the sheer volume of the product being diverted,” an official of the Major Oil Marketers Association of Nigeria (MOMAN) said.
“So, as NNPC was pumping more petrol to bridge the shortfall, the fuel was being diverted, so much that it created scarcity in the domestic market.”
One major attraction, according to a fact finding mission set up by the federal government and coordinated by the Department of State Security (DSS), the upward swing in the prices of crude oil in the international market, while being a blessing for the country as it means more revenue for the government, has also been a major factor boosting petrol smuggling from Nigeria.
According to an official: “The increase in the price of crude oil in the international market has been a major incentive for the product diversion. Our PMS price is the cheapest in the West Africa, so it is aiding massive product diversion.”
Indeed, a report released early this month by GlobalPetrolPrices.com, which monitors fuel prices around the world, showed that at of N145 (or $0.40) per litre, Nigeria ranked the eighth cheapest place in the world to buy petrol.
Crude oil prices have been on the steady rise since last November following landmark agreement between the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC countries led by Russia agreed on Thursday to extend oil output cuts until the end of 2018.
Prices have surged from below $60 per barrel to $69/ barrel now.
While the rising oil prices have jerked up the landing cost of petrol to N171 per litre, the Federal Government has insisted on maintaining a regulated price regime of N145 a litre.
“NNPC wishes to assure motorists and other consumers of petroleum products that the pump price of petrol remains N143 per litre in NNPC Retail outlets and N145 in other fuel stations, while PMS ex-depot price of N133.28k per litre to marketers is still being maintained,” NNPC had stated.
Perhaps alluding to the allure of the lucrative margins out there in selling the product outside officially approved channels, but at the same time now wanting to be on the wrong side of the law, Independent Petroleum Marketers Association of Nigeria (IPMAN) and Depot and Petroleum Products Marketers Association (DAPPMA) have demanded that the government fully deregulate PMS pricing to allow marketers sell the products at profitable margins.
In the meantime, the federal government is not folding its arms.
Consequently, marketers are now to furnish the DSS with daily report on the loadings from the refineries, depots and tank farm.