Financial Vanguard learnt that banks are now receiving more loan requests for funding petroleum products imports with the head of oil and gas in a tier-1 bank saying about N250 billion single request came to his desk last week, the third in the last one month.
He estimated the banking industry funding of petrol imports to be around N3.5 trillion before end of this year.
He stated: “We have started seeing a lot of petroleum marketers coming up with loan requests for importation of products, which we didn’t have before now not even when the President declared that subsidy is gone.
“We have also done our due diligence on the market and discovered that deregulation is gaining traction across the private and public sectors.
“Before now we do not entertain lending to petrol marketers due to issues around pump price regulations because many banks had burnt their fingers in the recent years over oil and gas related loans that failed.”
Petrol costlier than actual market price, NLC alleges
Meanwhile the Nigeria Labour Congress, NLC, has alleged that the pump price of petrol is higher than market price, accusing marketers of ripping off Nigerians.
NLC in a communiqué at the of its National Executive Council, NEC, in Port Harcourt Rivers State, by its President, Joe Ajaero, noted with “increasing dismay the shenanigans around the appropriate pricing of petrol, (Premium Motor Spirit, PMS) in Nigeria.”
NLC observed that there may be a gangup against Nigerians by fat cats in the industry as the current price of the product is significantly higher than the real market price. Padding of costs and abnormal margins seems to be the order of the day considering the revelations from the ongoing controversy between Marketers and Dangote group. It is entirely possible that Nigerian workers and masses are being ripped off by those who control the levers of Economic power in Nigeria which explains why the domestic public refineries may not immediately be allowed to come on stream.
“How can one explain the situation where marketers are still eager to import petrol with all the taxes such are import charges, fright charges, Nigerian Port Authority, NPA, Nigerian Nigerian Maritime Administration and Safety Agency, NIMASA, among others, despite a local source of refined petroleum products speaks volume.
“NLC demands appropriate pricing of petrol and calls for the Public domestic refineries in PH, Warri and Kaduna to quickly come back on stream to break-up the monopolistic stranglehold the big players have on the industry.”
At $72 per barrel of oil, imported petrol should be cheaper in Nigeria — Experts
Supporting NLC’s position, experts and other stakeholders, weekend, said at the current price of $72 per barrel of crude oil, the price of Premium Motor Spirit, PMS, also known as petrol, should be cheaper in Nigeria.
They said the current price of N1, 025 per litre (Lagos) was taken when crude oil, a major feedstock stood at more than $80 per barrel in the global market September 2024.
Since then, they said the price of crude has been volatile before dropping to the current $72 per barrel, without reflecting in the domestic price of petrol.
In different interviews with Vanguard, the experts noted that deregulation as currently practiced should enable the market to respond seamlessly to changes, including crude oil, the major raw material.
On his part, a Port Harcourt-based energy analyst, Dr. Bala Zakki, said: “The irresponsible petroleum products price dynamics in Nigeria is never obtainable in any Organisation of Petroleum Exporting Countries, OPEC member nations and the reason is very simple and straightforward.
“OPEC member nations have their functional state-owned refineries. No responsible government will or should abdicate its responsibilities of providing goods & service to the private sector.
“Globally, private sector operators are known to be shylocks, exploitative and profit maximizers.”
Similarly, Chairman of the Lagos State chapter of the Petroleum Products Retail Outlets Owners Association of Nigeria, PETROAN, Mr. Joseph Ehimen, said: “The prices that are driven by market forces would slightly fall though it will be a short term because local sources may fight back.”
Also, the Chief Executive Officer, Major Energy Marketers Association of Nigeria, MEMAN, Clement Isong, said: “The global market has been volatile, dropping and going back up and dropping again.
“Theoretically, petrol prices can fall in the domestic market, if the international prices are lower or continue to drop lower than the local prices.”
As reported by Vanguard, the landing cost of petrol, dropped by 4.5 per cent to N903 per litre in October 2024, from N945.63/litre in September 2024.
Data released by the Major Energies Marketers Association, MEMAN, showed that the landing cost stood at N945.63 in September 2024.
However, the transactional analysis obtained by Vanguard, yesterday, indicated that the landing cost stood at N903.64 per litre in October 2024.
According to the breakdown, the total direct cost, including product cost, freight (Lome – Lagos), port charges, Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA levy, Storage cost, Marine insurance and fendering cost at N863.06 per litre.
The transactional analysis, which guides oil traders and other stakeholders, puts total finance cost, including letter of credit (N15.60) and interest (N24.98) to N40.55 per litre.
The transactional analysis did not provide reasons for the drop in the landing cost but checks by Vanguard pointed to the relatively low price of crude oil, which stood at about $72 per barrel during the period.
IPMAN defaults NLC, say market fully deregulated
Independent Petroleum Marketers Association of Nigeria, IPMAN, has faulted the claims by the Nigerian Labour Congress that petrol prices in Nigeria are higher than actual market price.
IPMAN reminded NLC that the petrol pricing in Nigeria has been deregulated now it is now determined by forces of demand and supply.
The Public Relations Officer, IPMAN, Chief Chinedu Ukadike told Vanguard yesterday that with the deregulation, marketers set their prices based on the cost of purchase and other logistic cost as well as the cost of money.
Chief Ukadike said: “That assertion is completely not correct, it is false. NLC cannot set prices for marketers. If they are agitating that the price is too high for consumers, that is a different matter and the appropriate thing to do is to take their complaints to the government. The sector is completely deregulated and the government no longer determines the price of petrol in the country.
“The market is open for all players and prices are determined by the forces of demand and supply. The pump price is also determined by cost of purchase, cost of logistics and cost of money”.
He pointed out that the workers Union should put pressure on the government to supply crude oil to local refineries at a cheaper rate as a way of reducing the cost of the product in Nigeria.
On the ongoing negotiation between IPMAN and the Dangote Refinery, Chief Ukadike said significant progress has been made with the refinery agreeing to deal directly with the marketers.
“The negotiations have been fruitful and we are happy with how it is going. That’s all I can say at the moment because the National President will formally announce the outcome very soon. But I can tell you that it has been fruitful. The refinery has agreed to deal directly with us and agreement on terms is very close”, he explained.