Govt struggles for balance in fuel pricing
• Independent marketers groan as ex- depot price hits N158/ litre • Stakeholders seek value, pick holes in deregulation
CAUGHTIN the web of revenue depletion and attempt to keep pump price of Premium Motor Spirit ( PMS) stable, the Federal Government may be forced to accept sale of petrol at N200 per litre in the coming weeks.
Trying to find balance from a battered economy, worsened by COVID- 19 pandemic and low oil revenue, Minister of Petroleum Resources, Timipre Sylva, had insisted that increasing the price had become inevitable. With the increase in price of crude oil at the international market hovering at about $ 61.30 per barrel yesterday, the landing cost of petrol, at the interbank official exchange of N379.5, is projected at N180 per litre. Additional margin allowed
by the Petroleum Products Pricing Regulatory Agency ( PPPRA) stands at about N19. Wholesalers ( depot owners) are allowed to charge a margin of N4, retailers charge about N6 and the Petroleum Equalisation Fund, about N9 on every litre. This is to allow stakeholders recover costs and make profit. Nigeria had last year opted for deregulation of the downstream sector but has not been able to allow market forces dictate pump prices. The market has remained a monopoly with only the state oil company, the Nigerian National Petroleum Corporation ( NNPC) — which has access to foreign exchange and swaps the country’s crude with refineries abroad — taking hold of the market. Although the pump price of petrol was reduced immediately government deregulated the market following dwindling crude prices at the international market, the price had risen from N121.50 to N123.50 per litre in June; N140.80 to N143.80 in July and N148 to N150 in August. In September, pump prices rose further to N158 and N162 per litre.
When attempt was made to increase it in December last year, labour unions demanded the head of Sylva. They were furious over repeated hike in petrol price. The Nigerian Labour Congress ( NLC) and Trade Union Congress ( TUC) dragged the Federal Government to a dialogue, where NNPC agreed to slash the original N167.44 per litre by N5.
Sylva, however, said with no provision of subsidy in the 2021 budget and the inability of NNPC to continue to bear the cost of under- recovery, “NNPC needs to also think about optimisation of product cost because as we all know, crude oil prices are where they are today ($ 60).
WITH oil price benchmark of $ 40 per barrel in the 2021 budget, daily production estimate of 1.86 million barrels and high cost of oil production, Nigeria has had to rely on borrowing amid depleted revenue sources. This development made it impossible for government to return a subsidy regime, clouded with secrecy and regarded as a drainpipe of corruption.
Vice President of the Independent Petroleum Marketers Association of Nigeria ( IPMAN), Abubakar Shettima, told The Guardian that the ex- depot price, which was officially N143/ litre, had moved to about N158/ litre, making it impossible for petrol to sell at current pump price of N162 per litre.
“There is no change in price yet. But private depot owners have already changed their prices. The marketers are not happy at all because, despite the increase in price, most depots no longer have products; we are running at a loss.
“The private depots are the largest suppliers. They are selling at N158 per litre instead of N147. There is loss of about N8. There is an existing template from government that we must comply with,” Shettima said. A reliable source at the marketers union, who pleaded anonymity, told The Guardian that pump price of the product should ordinarily hover around N200 per litre, except for the role the NNPC is playing in cushioning the price.
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THE World Health Organisation ( WHO) and United Nations Children Fund ( UNICEF) have asked wealthy countries to share COVID- 19 vaccines with poorer nations once they inoculate their health workers and other vulnerable groups. Director- General of WHO, Dr. Tedros Adhanom Ghebreyesus and Executive Director of UNICEF, Henrietta Fore, gave the charge in a statement yesterday, saying about 130 countries with a combined population of 2.5 billion people were yet to deliver any COVID- 19 vaccines.
WHO explained that, of the 128 million jabs of COVID- 19 delivered so far, three- quarters of these have taken place in only 10 countries, and enjoined vaccine manufacturers to allocate the limited supplies equitably.
They said: “Over threequarters of those vaccinations are in only 10 countries that account for 60 per cent of global Gross Domestic Product ( GDP). As of today, almost 130 countries, with a population of 2.5 billion people, are yet to administer a single dose.
“The self- defeating strategy of wealthy nation will cost lives and livelihoods, give the virus further opportunity to mutate and evade vaccines and will undermine a global economic recovery. Whether we win or lose, we will do so together.”
They also admonished world leaders to look beyond their borders and employ a vaccine strategy that could actually end the pandemic and limit variants, adding that globally, over 107 million cases of COVID19 and over 2.3 million deaths have been recorded.
MEANWHILE, Nigeria has been named one of the countries to get vaccines through the COVAX Global vaccines facility, the Global Vaccine Alliance ( GAVI), as it is expected to receive 16 million free doses in the first half of the year. COVAX, an international alliance co- led by GAVI, the Coalition for Epidemic Preparedness Innovations ( CEPI) and the WHO and over 180 countries, is a global initiative to support the development, manufacturing, and distribution of COVID- 19 vaccines for about one billion people by the end of 2021.
In a statement, yesterday, GAVI shared the first forecasts of countries that would receive COVID- 19 vaccines through COVAX’S Advance Market Commitment ( AMC), adding that COVAX had allocated over 330 million doses for low and middle- income countries, including Nigeria and will aim to deliver most of these before June ending.
The Guardian learnt that Nigeria, as one of the 92 ODA- eligible countries participating in the COVAX AMC initiative, would benefit from the arrangement and access free vaccines for at least 20 per cent of its population.
It was also learnt that the United Kingdom ( UK) would be playing an active role in ensuring effective and equitable introduction of COVID- 19 vaccines. “This is a global pandemic that needs global solution.
The UK is at the forefront of tackling COVID- 19 worldwide and has so far pledged up to £ 1.3 billion of UK aid to end the coronavirus pandemic as quickly as possible, championing access to vaccines, especially for the poorest nations.