Petroleum Products: Marketers Insist on Review of PPPRA Pricing Template

      

                              Ex-Petroleum Resources Minister, Mrs Diezani Allison -Madueke

Petroleum products  marketing companies  are seeking  a review of   the pricing template of Petroleum Products Pricing and Regulatory Agency (PPPRA) as the only  measure that will  increase the profit margins of the marketers  and protect  jobs in the sector.

THISDAY gathered that the companies have continued to sack workers  to reduce operating cost  and the effect of the current  exchange rate in the country.

According to the latest PPPRA template, the landing cost of Premium Motor Spirit (PMS), popularly called petrol at the ports is N143.71 per litre.

The price however, goes up to N156.91 per litre after the addition of the distribution margins for the retailers, dealers, transporters, administrative charges and Bridging Fund.

To ensure that the marketers sell at the official pump price of N65 per litre, they are entitled to an under-recovery of N91.91 per litre as subsidy.

But the Chairman and Managing Director of Mobil Oil Nigeria Plc, Mr. Adetunji Oyebanji told THISDAY that while the cost of doing business is going up, the profit margins allocated to the marketers in the PPPRA template have remained fixed.

Oyebanji said some marketers retrenched their workers to reduce the increasing costs of operations.He called for deregulation, adding that when the market is free, the marketers will be able to price petroleum products appropriately.

“The problem is that we have a situation where we operate a fixed margin. When your cost is going up- your workers are asking for more salary everyday; you hear of strike everyday because workers want better condition of service. When your margin is fixed and those costs are going up, at a point, if you are not careful, you will go into the red. Therefore, what is causing this retrenchment is that people’s costs and expenses are getting too much; you cannot cope with it. So, you have to make certain adjustment somewhere,” he said.

Oyebanji also pointed out that fuel supply was  still not perfect as the PPPRA template did not reflect the current exchange rate.He called for regular update of the template to reflect current conditions and encourage marketers to import fuel.

“There is an exchange rate element in the PPPRA template and if that exchange element does not reflect the current exchange rate, you will lose in the transaction. If you buy fuel at the exchange rate of N158 or N156 per dollar and the template is saying N152 as the
basis for which subsidy will be paid to you, then you know that there is a problem. So, there is a need to update the template regularly so as not to discourage people, who want to import,” he added.

He noted that the entry of the Nigerian National Petroleum Corporation (NNPC) into the retail business has led to increased competition, but added that his company would continue to increase its market share, despite the competition.

“As you know, the NNPC has gone into full retailing. So, it is like another major has come into the market. But that is competition and we will address that accordingly by doing what we should do as marketers to make sure that we have our own market share,” he said.