The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has accused petroleum marketers of exploiting Nigerians through inflated fuel prices even when there was a drop in the price of crude oil.
PENGASSAN President, Comrade Festus Osifo while briefing newsmen on the state of the sector on Monday in Abuja, added that at a period when crude oil is sold for $60 per barrel, marketers ought to petrol between N700 to N750 per litre however, this was not the case, as the price of petrol has remained around N900 per litre.
While noting that the unjustifiable pricing was due to failure of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to carry out its oversight duties effectively, he said Nigerians should at least breathe some fresh air when the price reduces because when the cost of crude oil increases, marketers would be sure to increase the pump price of petrol.
He said: “In the downstream today, in the Nigerian oil and gas industry, we have seen a trend. And the trend, if you could recall, at a time when the price per litre of petrol was sold around 900 Naira per litre, you realise that the international crude price was somewhere around $80 per barrel.
“So we have been monitoring the trend. When the crude price reduced to around $60 per barrel, we did not see a commensurate reduction in the pump price. Because naturally, two things contribute principally to the price of PMS, for example, or the price of petroleum products.
“One is the crude price, and the second is the exchange rate. So these are the two highest contributory factors. In fact, they contribute up to 80% of what the final price of PMS would be.
“So what that means is that when the crude price reduces, the PMS price also reduces, most especially when the exchange rate has been relatively constant. So if crude price was somewhere around $80 per barrel, and we were having pump price at about 900 Naira per litre or thereabout, today, at a time, crude price hovers around $62 to $65 per barrel. But we only saw a marginal reduction in the pump price.
“And if you do the calculation, you will realise that it is, I mean, Nigerians were exploited within that period. Because there is what we call PLATT. If you go online, you are going to see the PLATT cost per cubic metre of PMS
“And when you convert that to litres, and you bring it down to our Naira, you are going to see that at a time when crude price was around $60 per barrel, we should be buying our PMS somewhere around N700 to N750 per litre. That is how it should be when you do the calculation properly.
“Yes, we understand that people have invested in their business, and they want to make a profit. It is the responsibility of businessmen to maximise profit. We don’t begrudge any business organisation that wants to maximise profit. That is why we have the regulators.”
Osifo urged NMDPRA to ensure it publish pricing templates in a regular basis, as it was the only way to ensure transparency and prevent exploitation under the guise of deregulation.
“It is the function of the regulator to ensure that Nigerians are not exploited. So we call on NMDPRA to have a platform with which they publish what the price ranges could be, looking at what the price is and telling it to our local price here in Nigeria. So we call on them to be allowed to that responsibility. We call on them to do everything possible to ensure that Nigerians are not exploited.
“Because if this trend continues, it means that even if crude price comes down to $50 per barrel, we will not see appreciable gains. The way those that have invested in the industry works is that tomorrow when the price of crude rises to $80 or $90 per barrel, we are going to pay more. So why can’t we reap the benefit when the price comes down?
“We don’t begrudge businesses for making profits. But it is the regulator’s responsibility to protect the people. If this exploitation continues, Nigerians will never benefit from global oil price drops. They will only bear the burden when prices rise.”
Expressing concerns over the continued shutdown of the Port Harcourt Refinery over periodic maintenance, PENGASSAN urged the Nigerian National Petroleum Company (NNPC) limited to look at the operational model of the refinery and adopt the Nigeria Liquefied Natural Gas (NLNG) model in to ensure the refinery was managed optimally.
“We are calling on government and the handlers of the refineries, the management of NNPC Limited, to look at the full scope of the refineries, to look at the operational model of the refineries, and to yield to the time-tested call that we have made in PENGASSAN for over 15 years now that government at all level should come together and ensure that our refineries are managed optimally.
“We have called that government should bring about the NLNG model in the management of the refineries, because that model has worked.
A model where you have the international oil companies partnering with the NNPCL to be able to drive value in the NLNG. So why can’t we bring about that same model, that similar model in the management of our refineries?
“By bringing in investors, internationally certified investors that have built or managed refineries all over the world. Government will now reduce their shareholding to maximum of 49%, and you allow these investors to take the lion’s share as it is today in NLNG, where the private companies, Shell, Total Energies, and E&P, they have combined shares of 51%, the government has 49%, and this model has worked. When this is done, we will reduce politics, reduce government interference at all level.”
Expressing concerns over the recently signed Executive Order on the costs of production in the upstream oil and gas industry especially the call on companies to reduce cost of operations, PENGASSAN while noting the many challenges and avoidable costs incurred by companies due to vandalisation, and insecurity, insisted that government must play its part of ensuring the security of lives and properties especially oil and gas infrastructures.
“One of the challenges that is affecting us today in the Nigeria oil and gas industry is that the cost that the upstream companies spends in protecting their facilities, in protecting their infrastructure, both in land, in sea, shallow waters, deep waters, etc is quite prohibitive.
“In fact the chief reason majority of the international oil and gas companies started leaving Nigeria is principally because of insecurity. Majorly because the cost of securing facilities, infrastructure in the Nigerian oil and gas industry became prohibitive. That is why they found places like Mozambique, Guyana which are much more attractive because you don’t have such problems there.
“Even in some Africa countries like Angola and Congo, you don’t have the kind of security challenges that we have here in Nigeria over there. So whereas it is quite good on paper to push these companies to reduce their cost of production, but for us, there is a part that the government must play; the security of lives and properties squarely rests at the foot of government. We want them to be alive to their responsibility, they have to champion these costs.”
While commending the National Honours on heroes of June 12 including the late Secretary General of the Nigerian Union of Petroleum and Natural Gas Workers (NUPENG), Comrade Frank Kokori by President Bola Tinubu, PENGASSAN however called for due recognition of its past President and Secretary General, Comrade Gani Owodunni and Milton Dabbi respectively,for their pivotal roles in the pro-democracy struggles.
“It was because of their resilience, because they stood their ground to ensure that what was right was done, that was why PENGASSAN was proscribed in 1994 because there was a strike that was going on as of then, the Abacha government pushed them consistently to call off the strike, but they refused they will not call off the strike until the needful is done.
“So, PENGASSAN and NUPENG were proscribed in 1994 this was due to the doggedness of Comrade Comrade Gani Owodunni as well as Milton Dabbi so we call on government to do what is needful by also recognizing these our leaders who were true heroes of June 12.”
Osifo urged government to be responsive to the plight of Nigerians, allow all Nigerians have freedom of speech and freedom of association, and to do what is right so that the lives of Nigeria so would be much more better.
