Fuel Subsidy: NNPC Issues Directive to Marketers on New Price

The Nigerian National Petroleum Company Limited (NNPC Limited) has issued a new directive to oil marketers. The new directive outlines new payment plan for petroleum products. This comes after the Federal Government announced the removal of fuel subsidy about two weeks ago. According to Punch, NNPC Retail in a circular advised marketers to consolidate their old orders at the previous fuel price to buy a truckload of 45 million litres of petrol. The circular reads, “Following the full deregulation of PMS, NNPC Retail has made the following options available to help customers manage the impact of the additional cash flow requirement: Marketers now have the option of consolidating pre-paid self-owned tickets for fresh tickets in line with the revised price. Interested marketers can engage their respective NRL Depot Representative for guidance on how to initiate this option. “Also, there is an option for a cash refund. Marketers who are interested in initiating this option should send in an official request addressed to the MD NNPC Retail. The request should include evidence of payment and order details (RRR number, Sales quotation number and Meter ticket number). Upon receipt of other official requests together with the above-supporting document sets, your refund request will be made processed.” Oil marketers have expressed concerns about the ability to afford the new prices. The Operations Controller of the Independent Petroleum Marketers Association of Nigeria, Mike Osatuyi, wondered where marketers were supposed to source such large funds. He noted, “The price difference is huge and most can’t afford it. “Instead of ordering for one truck, marketers can now go for maybe a quarter or half truck just like it’s being done for diesel.” Osatuyi also predicted that the country’s daily fuel consumption would significantly decrease due to the price increase. He said, “Since NNPC said we consume 66 million litres daily, we are sure that it would drop to as low as 30 million litres soon.” A former Chairman of the Major Oil Marketers Association of Nigeria and Chief Executive Officer of 11 Plc, Tunji Oyebanji in a chat with the platform stated that ending fuel subsidies would halt smuggling and reveal Nigeria’s actual daily petrol consumption. He also projected an increase in mergers and acquisitions within the industry due to financial pressures. “Removing petrol subsidies is one of the best decisions Nigeria would ever make because smuggling would stop, many smaller stations will fold up and would get acquired by bigger ones,” Oyabanji said.