Fuel distribution system is collapsing, MOMAN warns Buhari

LAGOS, Nigeria – Oil marketers under the umbrella of Major Marketers Association of Nigeria (MOMAN) at the weekend  reiterated  its continued partnership with  the Nigerian National Petroleum Corporation (NNPC) to ensure seamless supply of petroleum products across the country.

It’s  Chairman,  Mr Tunji Oyebanji,who gave the assurance at a press conference in Lagos at the weekend on the association’s activities in the downstream operations. Oyebanji implored the Federal Government to consider removing  subsidy  on petroleum products on the strength of the dwindling crude oil prices caused by the deadly Coronavirus.

The Chairman of MOMAN, said that the N450 billion government enmarked for subsidy in the 2020 budget would not add value to the nation’s downstream sector and the lives of Nigerians.

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He advised government to use such huge amount pegged for subsidy in the budget to develop other sectors that will be beneficiary to Nigerians, such as healthcare, education and roads among others. Oyebanji, who is also the Chief Excultive Officer,  11 Plc told reporters that  removing  fuel subsidy at the period of drop in prices would eliminate waste,address the nagging issue of low margin of marketers as well as set on the country on the path of determining appropriate pricing  for the product  in the country.

He also  advocated the need for the restructuring of the nation’s downstream oil industry in order to set it on the path to progress.

’’The elimination of oil theft and leakages in the system, the optimization of the supply chain, the introduction of alternative energies and the regular and consistent maintenance of the distribution infrastructure are all necessary aspects of this downstream reform, which passage of the Petroleum Industry Bill will provide an opportunity for the country to resolve once and for all’’

Oyebanji,who said his group recently attended a working session with the Group Managing Director of the Nigerian National Petroleum Corporation(NNPC), Mallam Mele Kyari on the ills in the nation’s downstream petroleum industry, expressed that MOMAN will not condone fuel theft, fuel adulteration or illegal refining of petroleum products by unlicensed entities.

He added that MOMAN would collaborate with its  business partners such as dealers and transporters  to support the federal government and the Nigerian National Petroleum Corporation(NNPC) to eliminate  these  malpractices. He added that his will include, working with our transporters and dealers to strengthen processes and ensure that no illegal or adulterated products find its way into our system.

He expressed MOMAN’s support for the federal government’s drive for the full exploitation of the country’s gas reserves including deepening the use of Liquefied Petroleum Gas (LPG) and Compressed Natural Gas(CNG)in the country. He disclosed that his group is prepared to invest in the safe installation of Liquefied Petroleum Gas (LPG) facilities in its stations across the country, adding that the development will eliminate the unsafe practice of dispensing  cooking gas through unlicensed roadside vendors.

‘’With respect to Compressed Natural Gas(CNG),MOMAN encourages immediate engagements with the private sector to identify policy measures that will make deployment of CNG at retail outlets a reality for the country in the shortest possible time. MOMAN will collaborate with government and other stakeholders in implementing any such initiative,” he said.

He also announced that MOMAN has partnered  the Nigerian National Petroleum Corporation and NARTO  to float truck fleet renewal, stressing  that the partners would engage the Finance industry on funding the scheme for the country. He added that the program would contribute significantly to the reduction of loss of lives and property, engendered by the distribution of petroleum products in the country.

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‘’Ultimately, the degradation and deterioration of the truck fleet as well as the inability of the downstream oil industry to upgrade its equipment and facilities, presents a risk to the distribution infrastructure. Refineries, depots, pipelines, trucks and filling stations are all in need of regular maintenance and upgrade. These maintenance and upgrade are funded by industry margin’

Oyebanji said that government is spending more on petrol subsidy and the need for the Petroleum Products Pricing Regulatory Agency (PPPRA) to increase margins on the product now to prevent the a collapse of the nation’s fuel distribution system. According to him, the petrol pricing template of the PPPRA, margins for retailers and dealers are N6 and N2.36 per litre while transporters’ allowance is N3.36 per litre.

” A  review of the margins was overdue, the current margins were limiting marketers’ ability to invest in new trucks and the upgrade of filling stations. We need the PPPRA to look at our margins now. It is taking too long and our members are declaring losses. It can’t last longer than this. It has been too long. Increased margin today is not a luxury; it is a necessity, otherwise our fuel distribution system will collapse. It is collapsing already.”

He said the margins could be increased without causing any change in the pump price of petrol. According to MOMAN boss, MOMAN believes that an immediate increase in margins is necessary to halt the further degeneration of the petroleum distribution infrastructure.

“The restructuring or reform of the downstream oil industry is necessary.  The elimination of oil theft and leakages in the system, the optimisation of the supply chain.

“The introduction of alternative energies and the regular and consistent maintenance of the distribution infrastructure are all necessary aspects of this downstream reform, which the passage of the Petroleum Industry Bill will provide an opportunity for the Country to resolve once and for all.