…Price Modulation To Replace Subsidy
Marketers in the nation’s downstream petroleum industry may have to start exploring other business models that must be independent of the regular subsidy claims from government as the internal market arrangement comes under review.
Government declared weekend that the programme which has seen marketers cart home hundreds of billion Naira would soon be replaced by price modulation which would entail oversupply of a mix of fuel options for various consumers at prices that will increasingly decrease over time.
Nigerian National Petroleum Corporation (NNPC) declared weekend that it would take holistic review of the nation’s internal fuel subsidy arrangement to know if the basis for it remains valid under the prevailing market circumstances.
However, the review will not jeopardize the commitment of government to first defray the outstanding N413 billion claims by marketers that participate in petroleum products importation in the country.
NNPC said in a statement that corporation’s crude oil swap arrangement and export of allocated crude oil has been replaced with direct trading arrangements while to the Ministry of Petroleum Resources declared weekend that it would revisit the subsidy regime to determine its reliability.
The UNION reports that federal government recently approved the immediate payment of N413 billion to oil marketers as outstanding subsidy claims.
The approval came part of a desperate bid to stave off scarcity of premium motor spirit also known as petrol as high demand Christmas season looms in.
NNPC spokesman, Mr. Ohi Alegbe, said that “It is our belief that with the outstanding payment due to the oil marketers now assured, the marketers and other downstream players will join hands with the NNPC to guarantee that the nation remains wet with petroleum products all year round.”
The corporation also said it had stepped up measures to eliminate the noticeable fuel queues in petrol stations across some major cities in the country with the injection of additional volumes of PMS to enrich product availability in the affected areas.
The corporation noted that the initiative to ensure zero fuel queues had been bolstered with the payment approval to the marketers by the federal government.
Majority of petroleum products marketers had converged on Abuja in anticipation of the payment. Olufemi Adewole, Executive Secretary, Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), recently confirmed that government had promised to offset some of the subsidy arrears by the first week of November.
The marketers had in frozen supply of fuel in order to squeeze government to pay the outstanding claims, causing fuel queues in some parts of Lagos and Ogun states, while stakeholders said the situation had dragged for weeks in Oyo, Osun, Ondo and Kwara states.
Minister Designate, Dr. Ibe Kachikwu, stated in Lagos weekend that the subsidy payment must be made predictable if it must be sustained, adding after all that Nigeria can longer continue picking monthly subsidy bills