July 14, 2024
DAPPMAN seeks FX access at official rate to boost fuel supply
– By Godswill Odiong

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The Depots, and Petroleum Products Marketers Association of Nigeria (DAPPMAN) has called on the government to give petroleum marketers access to foreign exchange at the official Central Bank of Nigeria (CBN) rate to enhance the supply and distribution of Premium Motor Spirit (PMS) across the nation.

Speaking at a press conference in Lagos, DAPPMAN Chairman, Mrs. Winifred Akpani, said the burden of sourcing FX through the parallel market for transactions domiciled in Nigeria had left petroleum marketers in “dire straits”.

“Accessing USD for our operations has been an insurmountable hurdle for petroleum marketers. The difference between CBN exchange rate and the Parallel market exchange rate continues to get wider by the day,” she said.

Akpani noted that in addition to core operational expenses that are denominated in USD, petroleum marketers also contend with sourcing funds from the parallel market to pay for fees and levies, some unauthorised, that are also charged in USD.

“For example, to charter a vessel to convey 20,000 MT of PMS within Nigeria for 10 days, freight charges are denominated in USD, that comes to about N220 million at official FX rate of N440 and a whooping N440 million for petroleum marketers who have to source FX from the parallel market at N880. This implies an additional cost of N11 per litre for this transaction due to the FX official/parallel market differential,” she said.

According to her, for the same transaction, Jetty fees, also charged in USD amount to N15.4 million at official FX rates and N30.8 million for petroleum marketers who source from the parallel market.

In addition, Jetty Berth is charged in USD and comes to N2.2m at official FX rate and N4.4 million at parallel market rate, while Port dues, charged in USD by the Nigerian Ports Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA), which are charged in USD, come to N71.51 million at official FX rate and N142.796 million for marketers who source FX from the parallel market.

“DAPPMAN hereby calls on the government to establish a level playing field in the sector by giving petroleum marketers access to FX at the CBN exchange rate for their operations. This is a passionate appeal to the government as we can confidently state that accessing FX through the CBN window will significantly enhance capacity and facilitate seamless supply of PMS and birth a regime of sustainability in terms of storage, distribution, and supply across the nation,” she added.

The Nigerian National Petroleum Company (NNPC) Limited, which historically served as the supplier of last resort, is now the major oil downstream company in Nigeria with the acquisition of OVH and has full access to USD at CBN’s official rates. The NNPC also has access to products through swap arrangements.

Akpani decried the absence of a level-playing field that guarantees access to USD for all marketers at official rates, noting having the NNPC as the sole importer of PMS was not sustainable, considering the huge consumption of the product.

She said strategic decisions must be made in the industry to ensure Nigeria takes full advantage of expected growth in oil products demand across Africa. “For us in Nigeria, this will include full deregulation of the sector and a deliberate strategy geared towards creating an enabling environment for all petroleum marketers to add value, alongside the NNPC,” she stated.

Akpani said DAPPMAN considers the government’s plan to remove subsidy in 2023 as the right decision that will reposition the sector for sustainable growth and development, while freeing up funds to shore up the capacity needed to transform the health, education, defense, and transportation sectors among others.

“As we approach the Yuletide and transition to the election year in 2023, the nation needs the full involvement of all operators to shore up capacity and ensure product availability at excellent service levels. While there might be fears regarding possible scarcity of PMS, DAPPMAN assures Nigerians of its ability and willingness to work assiduously to ramp up supply as the government addresses the challenges of FX availability in the sector,” she said.

DAPPMAN lauded the Federal Government and the Nigerian Midstream and Downstream Regulatory Authority for emerging gains in the sector, especially, following the introduction of the Petroleum Industry Act. “There have been important meetings aimed at shaping a sustainable future for the sector. These must continue as the success of the sector in the face of the intervening global energy crisis depends on collaboration and consideration of how operators can shore up capacity on the wings of market-friendly policies and a level-playing field,”Akpani concluded.

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