Marketers Rule Out Fuel Price Hike
Crude prices slump 10%
Oil marketers have ruled out fresh increase in domestic fuel prices for now, even as crude prices have slumped by more than 10 percent over the past five days to the temporary relief of consumers.
Speaking in Lagos at the weekend, Chairman of Major Oil Marketers' Forum and Managing Director of Oando Plc, Mr. Wale Tinubu, told newsmen that the fuel stock currently being dispensed were bought when lading cost of the product was N42 per litre.
Tinubu who spoke at the launch of petroleum products haulage by Oando through the rail system, said while the landing cost of imported fuel now stood at N49 a litre, the oil majors still had about 80,000 metric tons of fuel it imported at the old cost, yet to be dispensed.
"We do have a lot of stock. The essence of liberalisation means that we can pre-purchase ahead of crude price increases," said Tinubu.
"Now we have about 80,000 metric tones offshore Lagos yet to be discharged, which were purchased at the old price of N42 a litre.
"Landing cost of petrol today is N49. We get subsidised price from the Nigerian National Petroleum Corporation (NNPC), we will continue to pass on the subsidy from NNPC to consumers. Accordingly, we don't need to increase prices," he said.
Tinubu confirmed that the NNPC is spending about N500 million daily to subsidise the sale of imported fuel in the domestic market.
As crude oil prices climbed higher and nearing the $50 per barrel mark, the NNPC had raised alarm that it might not be able to sustain the level of subsidy needed to keep pump price of fuel low. The corporation fixed depot prices at N33.50 per litre.
Crude oil prices have, however, been on the decline in recent times. The light sweet crude closed at $44.98 barrel at the weekend while the benchmark crude, the Brent closed at $40.58 a barrel.
Comparatively, oil prices have dropped 10 percent in the last five days, which analysts attributed to the re-start of oil exports by Iraq.
Speaking on the Oando/Nigeria Railways Corporation (NRC) fuel haulage project, Tinubu said the objective was to ensure that consumers had products "at the cheapest possible price."
"That means we will be looking for all sorts of means to improve our efficiency, improve our distribution and lower our cost and the rail initiative was one which we took very seriously.
"We found out what the problems were, so investment was required so we provided the funding, worked hand in hand with the crack team that was provided by NRC."
Oando is funding the project to the tune of N100 million. Tinubu said the company had already made an advanced payment of N50 million, with the first consignment of 600,000 litres of fuel hauled by two locomotives with 20 wagons, arriving Kano last Thursday.
Also speaking at the event, Transport Minister, Dr. Abiye Sekibo, said Oando/NRC project followed Federal Government's decision to concession the operation of the corporation by inviting the private sector to participate in the operation and development of the rail sector in order to generate the required funds.
Sekibo directed the NRC management to put in place arrangement that will ensure round the clock security for the fuel that will be moved through the rail.
While calling on other marketers and organizations to patronize the services of the railways for bulk movement of their products and consignments, the minister charged the NRC management to be commercially aggressive in wooing new and traditional customers to partner in reactivating and evolving new packages.
"This remains the only way for the NRC to survive," he added.
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