Subsidy removal yesterday worked like magic in Lagos as long queues disappeared at petrol filling stations.
At filling stations in Ikeja, Mushin and Ikorodu Road, among others, petrol was being sold. Some known for “good metering” had queues of about five to 10 vehicles. Others were empty and motorists drove in and out freely. Some filling stations were not selling because, the attendants said, they have no fuel.
But Commercial buses and taxis have increased their fares. For instance, buses that ply Eko Hotel to Ojuelegba collect N250 as against N150. Ojuelegba to Ikeja is now N250 as against N150. Mowe/Ibafo to Oshodi, which was N200, has gone up to N250. Egbeda to Oshodi, which was N150 is now N250. Dopemu to Yaba is N300 as against N150.
Although the removal of subsidy was praised by many Nigerians, particularly those in the manufacturing and operators of small and medium enterprises (SMEs) as they need not labour to access fuel, there are concerns that with the state of the naira, some marketers may still sell above N145 per litre as they will source their foreign exchange (forex) from the secondary market, meet their logistics requirements and tackle other issues.
When NNPC was importing and giving the marketers at subsidised price with some margin for using their (marketers) retail outlets and a little profit, some of them sold at N130 per litre. Now that the government has fixed the price at N145 per litre, marketers may not stick to the government’s margin.
Mobil Oil Plc spokesman Akin Fatunke said the N145 per litre template for any patriotic marketer that is not greedy is enough. According to him, the government factored the cost of forex acquisition, logistics needs and marketers’ margins into the new price. The new price can only increase if there is a major economic depression, which will make the price of dollar soar far more than it is now or if the price of crude rises very high.
He said: “At this point in time, if we put everything together in terms of Platts, logistics and other things, the new price is okay. Any reasonable, efficient and proactive businessman can make profit with the new price template despite the cost of securing forex, importing and clearing from the ports.”
Fatunke said any marketer who wants to sell above the new pump price does that at his/her own detriment because aside the fact that the Petroleum Products Pricing Regulatory Agency (PPPRA) and the Department of Petroleum Resources (DPR) will closely monitor the retail outlets, in the long term also, there will be supply glut due to competition and people will buy at stations with lowest price and “good pumps”.
He agreed that some marketers have proclivity for profiteering but noted that with subsidy removal, there will be competition among marketers because the government looked at all the nooks and crannies in terms of petrol price before settling for the price band of N145 per litre. In Fatunke’s view, pump price will not be same across the country, depending on how far a filling station is from the port. He cited the current price in Ibadan and Enugu, which is higher than what obtains in Lagos.
Any marketer who sells above N145 is not only profiteering but should be seen as a cheat, he said, adding that there will be a glut in the market in the long run and such marketers will be out of business.
