|
PEF and deregulation
It was reported recently that the Petroleum Equalisation Fund (PEF), paid N27.05 billion in haulage bills (bridging claims) to independent petroleum products marketers between 1999 and 2002. The PEF said a total of 4,500 trucks loaded fuel daily from the nation�s 21 depots. The Fund earned N30 billion, out of which it spent N740 million on capital projects within the period. The agency spent N4.4 million on stationery and printing in 1998. In 2001 and 2002, the amount rose to N49 million and N43.6 million, respectively. The PEF management, in a presentation to the House of Representatives Committee on Public Accounts, said the recurring vandalisation of oil facilities and pipelines justified the Funds�s existence. With the Federal Government�s deregulation of the oil sector�s down stream, the PEF said it would still be relevant in monitoring the standard of imported petroleum products.
The PEF was established by Decree 9 of 1975, which was later amended by Decree 32 of 1989, to ensure the uniform pricing of refined petroleum products, irrespective of the point of production or import. The country was divided into 26 zones, each with an assigned price differential to be claimed from the PEF, depending on the distance from point of supply, and with emphasis on the mileage covered by tanker trucks. Ideally, the Fund was intended to retain all surplus revenue accruing from the sale of petroleum products, compensate disadvantaged independent marketers for the losses they incur because of uniform pricing, and recover the difference between landed cost of imported fuel and the �regulated� price in the country. Presently, the PEF is essentially funded by an in-built cost of N1.50 charged on each litre of fuel. Practically, however, the PEF ensures that consumers located closer to the source of fuel production or import subsidize the haulage expenses of dealers and buyers in remote areas.
It is thus clear that the PEF could only be relevant under a highly regulated regime. Therefore, the Fund�s reference to monitoring standards, a job reserved for the Department of Petroleum Resources (DPR), is curious. It is common knowledge that, while the pump prices of petroleum products were regulated, the PEF failed woefully to maintain a uniform oil price nationwide. The Fund has been accused of massive corrupt practices allegedly perpetrated through its shoddy verification of bridging claims and by reimbursing the losses of beneficiaries, even when such losses resulted from inefficiency. And, because of its emphasis on distance covered by tanker trucks, marketers in most oil bearing, swampy communities not accessible by road, are denied bridging claims.
With the deregulation of the down stream oil sector, oil marketers, under the umbrella of the Independent Petroleum Marketers Association of Nigeria (IPMAN), demanded the refund of their contributions to the PEF, arguing, rightly, that the contributions negated the spirit of deregulation. The IPMAN, as at June, argued that each marketer paid as much as N24,000 on every 30,000-litre truck of fuel at the rate of 80k per litre to the PEF. Till today, the government has failed to explain to Nigerians the need for an equalization fund under a deregulated regime that should respond to market forces.
For the 29 years of its existence, the PEF has served as a gold mine for rent and patronage seekers, with no quantifiable productive work to justify the billions of naira of public funds appropriated to it. The continued retention of the PEF, therefore, may represent a confirmation of the suspicion that powerful vested interests are preventing government from scrapping the parasitic agency. To portray the PEF as relevant, nothing stops such unscrupulous interests from sponsoring pipeline vandalisation.
Scrapping the PEF is long overdue. It will inspire public confidence in the FG�s deregulation project. The FG should approve the establishment of private refineries in all the six zones in the country to ensure a level playing field in a free market place. The PEF is an avoidable waste of public resources and a needless burden on consumers of petroleum products.
The PUNCH, Thursday, July 8, 2004.
|
|
| |
Copyright 2003 - 2004
Punch (Nigeria) Limited. All Rights Reserved
Powered by dnetsystems.net
dnet�
|
|
|
|
|
|
|
STOCK MARKET
|
|
As at Wed, July 07, 2004
|
|
8,265
8,250
8,235
|
| Nestle |
 |
N175.00 |
+296k |
|
| NNFM |
|
N25.09 |
+119k |
|
| UBN |
|
N38.10 |
+113k |
|
| Total |
 |
N196.50 |
-950k |
|
| Guinness |
|
N157.32 |
-828k |
|
| Conoil |
|
N170.00 |
-260k |
|
Volume: 69.1million
Value: N957.1 million
Deals: 4,010
Index: 27,792.91
Mkt Cap: N1.987 trillion |
|
|
| |
|
AUTO WORLD
|
|
|
| |
|
| |
|
|
| |
|
|
|
|
|
