Financial Energy Review
Independent Petroleum Marketers Association of Nigeria, IPMAN, has said that scrapping of Petroleum Equalization Fund (PEF) will ensure full deregulation. They therefore called on the Federal Government to scrap the management and Board of PEF, and in its place make the 21 petrol depots across the country functional and accessible to oil marketers.
IPMAN National Publicity Officer, Elder Ukadike Chinedu told journalists at the weekend in Abuja that bringing the products closer to marketers would eliminate the need for PEF.
He spoke in the wake of government’s indecisiveness over the pump price of petrol that has left consumers confused and jittery.
Ukadike explained that the scrapping of PEF “also entails full deregulation of the down-stream sector. Before the implementation of the policy, the government should ensure that petroleum products are pumped into every nook and cranny of the nation first.
“The government must make sure that all the depots and facilities of the Nigerian National Petroleum Corporation are functional. It should also ensure efficient infrastructural provision such as the railway system, to transport products from Lagos to other areas. That will make the price of the product to come down. That is normal; demand and supply will determine the price. When you scrap PEF, it means there is full blown deregulation. The nearest the product is to all consumers, the better. That means the product will be everywhere in the country”, he added.
He explained further: “If I am loading in Aba and there is product in Aba depot what will be the essence of PEF? We marketers are also paying NTA, if there are products in all the depots, you wouldn’t even see trucks on the road. Unfortunately, the funds that PEF is managing belong to the independent marketers because once PPPRA brings out its template the cost is included.
“For instance, in the last one it was N4.60 per litre, it is deducted from source. Is it not better that marketers are given promissory note, when you get to your destination you send it to your bank. As I speak with you PEF is holding our money for up to two years without payment”.
He decried the uncoordinated manner in which government’s deregulation policy was being implemented, saying it has left oil marketers without resources to run their operations.
“Let me tell you that we have become service oriented companies we are no longer talking about profit, we are just trying to stay in business. Unfortunately, the government is not thinking about the continuity of marketers in business.
“I also want to make it clear that in the latest pricing template released by the PPPRA which they have just reversed, you will see that the margin they gave to marketers is N6.49 per litre and if we are buying about 45,000 litre we spend close to N9.5 million.
“The same volume we use to buy for about N6.5 million or there about with the same profit margin of N6.49, the implication is that while the cost of purchase is increasing by the day, the government still expect marketers to sell the product at the same profit margin even when we know that the cost of operating the business continues to increase.
“What this simply means is that independent marketers may soon go out of business because as it is now, it takes one close to a N100 million to bring products to a station and the margin of gain is so small and considering interest rates from the banks, it is obvious that marketers may go under very soon”, he stated.
Reacting to the call for the scrapping of PEF, its spokesman, Dr. Goddy Nnadi, on Sunday defended the relevance of the fund, noting the decision was for the Federal Government to make.
He denied that the fund owed marketers for up to two years, saying its system is fully automated.
“I can tell you that PEF is now fully automated and payments don’t last more than one month. And we have more marketers now close to 10,000 marketers across the country. The benefits of PEF on Nigerian society are evident.
“If it is not you I won’t even have responded at all. Look at the socioeconomic importance of PEF today. If PEF does not reimburse marketers the cost of moving products in the South East and the North will be a lot more than what it is today”, he stated.
