Shipment courier

Fuel price hike looms as marketers oppose N5m shipping charge

  • The price reaches $105/barrel, which compounds the problems

By Vincent Nwamma, Eugene Agha, Abdullateef Aliyu (Lagos) & Simon E. Sunday (Abuja)

As Nigerians continue to groan under the gasoline shortage for the third week, oil traders could be on the verge of what they described as an additional burden from the Nigerian National Petroleum Company (NNPC) Limited which last week introduced a N500,000 transshipment charge on petrol.

NNPC Limited, in a letter dated February 18, 2022, said the new fee is intended to cover ship-to-ship operations for retailers, in particular depot operators, taking delivery of NNPC gasoline shipments at ports .

The current fuel shortage, which is easing, surfaced earlier this month after cases of adulterated petrol at petrol stations which allegedly affected vehicles just as parallel traders sold a liter for over N600 .

In the heat of the moment, NNPC announced in the letter the new ship-to-ship coordination (STS) charge of N500,000 for each gasoline transshipment operation involving NNPC maritime logistics.

The letter titled “Payment of STS Coordination Fee” which was signed by OIO Ajilo for the Group Managing Director, Shipping, stated: “Please note that NNPC management has directed that effective February 10, 2022, the sum of N500,000 only will be charged for STS coordination fee for each transshipment operation involving NNPC Marine Logistics.

NNPC Ltd explained that the charge covers the labor and logistics required to coordinate and produce cargo documents for transshipment operations.

Additionally, in another letter from the General Manager, Marine Logistics, titled “Commencement of STS Coordination Charge,” and posted on February 8, 2022, NNPC stated that its duties include coordinating ship-to-ship transshipment activities for pipelines. and product marketing. Company (PPMC), NNPC Retail Limited (which are subsidiaries of NNPC) and third-party distributors, as well as to facilitate the processing of customs clearances for shuttles and the preparation of the bill of lading at the end of the STS.

He then clarified that third-party marketers who did not lease marine logistics vessels were previously served free of charge, but would now have to pay the new fee.

Marketers cancel new charges

Meanwhile, oil traders are worried about the new fee as they fear it could trigger a hike in the price of gasoline.

Although the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) declined to comment on the new charge, a source said the association had written to NNPC highlighting the implication of shipping charges, particularly on the price. petroleum retail.

“This is certainly an additional cost for marketers, but we are in contact with NNPC to agree on the best possible way to mitigate these ship-to-ship coordination costs,” the official said.

Independent Petroleum Traders Association of Nigeria (IPMAN) Chairman Debo Ahmed said the accusation does not affect independent traders as they deal directly with NNPC deposits.

However, the Major Oil Marketers Association of Nigeria (MOMAN) said it would resist any planned increase in STS fees by the NNPC.

He said he has written to the federal government about the implication of any further hikes on members of the public, given the current gasoline shortage in most parts of the country.

MOMAN Executive Secretary Clement Isong in an exclusive conversation with Daily Trust said that many government agencies would like to unduly impose new charges on traders without regard to the government’s policies on changes.

“There is a price cap placed on STS by the government. Any fees that were not passed on to consumers would be resisted. Marketers cannot be forced to bear the brunt of change.

“We have communicated our position on the matter to the federal government. We don’t want to be blamed at the end of the day,” he added.

Speaking on the continued shortage of gasoline, Isong said it depends on NNPC which is the sole importer of fuel. He said more goods had been imported, but it would take some time to clear customs.

Oil price hits $105 against Russia and Ukraine

The price of crude oil hit a record $105 a barrel on Thursday after an escalation between Russia and Ukraine, the highest since August 2014, records show.

Russia would be the third oil producer and the second oil exporter. Already, the Organization of the Petroleum Exporting Countries and its OPEC+ alliance, of which Nigeria is a member, are increasing production, but more and more countries are unable to meet their quota, leading to lower supply in the face of growing demand.

Reports said Russia launched an attack on Ukraine early Thursday, with Ukraine guarding its borders and shooting down at least five Russian fighter jets.

At least three major buyers of Russian oil were unable to post letters of credit from Western banks to cover their purchases on Thursday, according to a Reuters report.

Brent crude was up $7.26, or 7.5%, at $104.10 a barrel as of 2:37 p.m. GMT, after hitting a high of $105.79.

If the confrontation continues, experts fear that the price of crude oil will continue to be above $100 a barrel unless there is no longer an alternative to US shale oil or Iranian crude.

Rising crude oil prices mean higher revenues for Nigeria, with the current budget of 17 trillion naira valued at $62 a barrel.

OPEC+ continues to increase production, but production remains limited by sabotage to 1.4 – 1.6 million barrels per day (bpd) for Nigeria.

However, on the other hand, this could result in a higher rise in the price of gasoline for local consumption amid funding issues of over N3 trillion in subsidies for this financial year.

NNPC Ltd had offered up to 270 billion naira per month to keep the retail price at 162-165 naira per liter despite landing cost over 200 naira, Daily Trust reports.

An expert reacts to rising oil prices

According to a Senior Lecturer (Economics) at the Lagos Business School, Dr. Bongo Adi, the 1991 Gulf War gave Nigeria a boon during the Babangida era. It wasn’t fully accounted for.

“Oil costs $105 a barrel; the price of fuel at the pump is high; we see high inflation all over the world. Nigeria also imports from the same market, so that’s not going to help us. And that’s what I say about the current high price of petrol in Nigeria, which some people mistakenly associate with contaminated fuel,” he explained.

Adi said that even though oil has risen, our production remains at around 1.4mb/d, down from 2.2mb/d. Nigeria is actually short on volume, which means revenues are in serious shortfall.

“So if the Dangote Refinery comes on stream, I can say it will be a boon for Nigeria. Because from what we read, Nigeria will sell crude oil to the refinery in Naira not Dollars Adi enthused about the refinery which should start operating by the end of the year.