By Audrey Lotechukwu
THUR, MAY 07 2020-theG&BJournal- For three months and since the lockdown imposed by the Federal and State Governments as well as the collapse in oil demand, the country’s thirst for petrol evaporated, leaving Nigerian National Petroleum Corporation (NNPC) with huge cache of unsold oil-both crude and refined products.
The NNPC, sources told theG&BJournal, has nowhere to go now because it has run out of storage space for incoming orders. The country has been struggling also to sell its crude oil despite the $10 price tag because demand have collapse and the world has no space for storage.
The trend has now forced a second review in ex-depot price of Premium Motor Spirit (PMS). The first downward price review occurred on March 8 2020 when prices were dropped from N117.6 per litre to N99.44 per litre, while ex-depot price was reduced from N133.28 per litre to N113.28 per litre.
‘’This is about the best time to also let go of the petrol price (PMS) setting regime like the country did for diesel market,’’ says Clement Ofuani, one time Commissioner of Economic Planning in Delta State and adviser to late president Musa Yar’ Adua. ‘’It is advised, so that even after COVID-19, if prices go up, you won’t be looking to government for answers but the market which appropriately should be the market determinant.’’
The Automotive Gas Oil (diesel) will not be affected by the new price regime because it is already a deregulated market.
The NNPC itself admits it is running out of space but explained the price reduction as a move ‘’to boost its sales volumes from billions of litres of Petrol it has in storage while providing affordable price to millions of customers.’’ But the cost of the petrol base material (crude oil) has since dropped off the cliff, and so also is the landing cost, which naturally should prompt a downward review.
On top of that, petrol sales has tumbled almost 80% in stations across the country, according to a petrol station manager in Lagos, a state with the highest consumption rate of petrol in the country.
‘’Nobody is buying except people who come in for a 5 litre gallon for use in their generators,’’ the manager told theG&BJournal.
The NNPC had about 2.68 billion litres of petrol in stock as at the April 1 2020. The country’s daily consumption is about 45 million. It is estimated that less than 10% have been sold since the lockdown came into place.
The latest drop in the ex-depot price of petrol is from N113.28K per litre to N108.00K P/litre across all products.
The NNPC said that the new ex-depot price of Premium Motor Spirit (PMS), reflects the company’s market strategy to make more sales while complying with the Petroleum Products Pricing Regulatory Agency’s (PPPRA) template.
The managing Director of the Petroluem Products Marketing Company (PPMC), Musa Lawan explained that the new price regime would enable PPMC to boost its sales volumes from billions of litres of Petrol it has in storage while providing affordable price to millions of customers.
He said the new price was arrived at after extensive review of market realities by the PPMC internal price review unit. The PPMC managing director noted that the Automotive Gas Oil (disesel) will not be affected by the new price regime because it is already deregulated market.
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