Why Oil Marketing Companies Are Running Away From Importation – Kyari
The Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, has defended the exclusive importation of Premium Motor Spirit (PMS), commonly known as petrol, by the oil giant.
While addressing the Senate Committee on Finance at the National Assembly complex on Wednesday, Kyari explained that oil marketers found it challenging to cope with the fluctuating prices in the downstream sector. Consequently, they opted out of importation.
Investigations revealed that petroleum marketers, including the Independent Petroleum Marketers Association of Nigeria (IPMAN), the Depot and Petroleum Marketers Association of Nigeria (DAPPMAN), and the Major Marketers Association of Nigeria (MOMAN), have chosen to boycott importation due to the instability in the foreign exchange market, which they deem detrimental to their survival and profitability.
However, the GCEO of NNPCL dismissed these concerns, assuring lawmakers that there are no issues in the downstream sector despite the corporation’s monopoly on importation. Kyari stated that oil companies withdrew because they couldn’t handle the oscillations and responsibilities imposed by the Petroleum Industry Act. He emphasized that NNPCL has a firm grip on the market and is effectively managing it.
“Some marketers buy from us and sell. But there is an element that we can’t control. For instance, truck owners can adjust their prices; we have no control over that.”
Kyari further claimed that the distortion in the foreign exchange market, which the marketers argued was a disincentive to their participation in the fuel importation business, was nothing to worry about.
“There is always a parallel market in every country. There is also an import and export window in every country, even in the developed world.
“But if there is always a narrow gap between the two and it takes time for you to have stability in this gap so that you have a low margin between the two for a sustained period, then businesses will thrive.
“I am very confident that by the end of the first quarter of next year, those margins will narrow, stability will come, and you will see others coming into the importation market.”
The GCEO, NNPCL, further argued that contrary to media reports of unencouraging profit, the oil giant has been doing well since the passage of the PIA.
“The NNPC Limited, which is a creation of the National Assembly, requires that we conduct business transparently and profitably in line with provisions of the law, to create value for shareholders, not to lose money, and also to continue to add value and pay dividends to shareholders.
” I’m glad to inform you, Mr. Chairman and Distinguished Senators, that as of October, we are able to deliver N4.5 trillion into the federation account as a company to this country in 2023.
“Every national oil company has a trading company. We have always had one that never worked prior to PIA implementation.
“Currently, NNPC Ltd. is delivering on its mandate through the PIA reforms that have brought us to be on par with our peers across the globe and not to lose money anymore.”
