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Access To Forex, Bane Of Marketers – DAPPMAN

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Marketers Association of Nigeria (DAPPMAN) says accessing foreign exchange at official rate was a serious challenge to marketers.
DAPPMAN’s Chairman, Mrs Winifred Akpani, who stated this at a news conference in Lagos, called on the Federal Government to give petroleum marketers access to foreign exchange at the Central Bank of Nigeria (CBN) official rate to enhance the supply and distribution of Premium Motor Spirit (PMS), also known as petrol, across the nation.
She said accessing foreign exchange at official rate would boost fuel supply across the country.
She added that the burden of sourcing forex through the parallel market for transactions domiciled in Nigeria had left petroleum marketers in dire straits.
“Accessing dollars for our operations has been an insurmountable hurdle for petroleum marketers.
“The difference between CBN exchange rate and the parallel market exchange rate continues to get wider by the day,” she said.
Akpani noted that in addition to core operational expenses denominated in dollars, petroleum marketers also contended with sourcing funds from the parallel market to pay for fees and levies, some unauthorised, also charged in dollars.
“For example, to charter a vessel to convey 20,000 MT of petrol within Nigeria for 10 days, freight charges are denominated in dollars, that comes to about N220 million at official forex rate of N440.
“And a whooping N440 million for petroleum marketers who have to source forex from the parallel market at N880.
“This implies an additional cost of N11 per litre for this transaction due to the forex official and parallel market differential,” she said.
According to her, for the same transaction, Jetty fees, also charged in dollars amounts to N15.4 million at official forex rates and N30.8 million for petroleum marketers who source from the parallel market.
“In addition, Jetty Berth is charged in dollars and comes to N2.2m at official forex rate and N4.4 million at parallel market rate.
“While port dues, charged in dollars by the Nigerian Ports Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA), come to N71.51 million at official forex rate and N142.796 million for marketers who source forex from the parallel market.
“DAPPMAN hereby calls on the government to establish a level playing field in the sector by giving petroleum marketers access to forex at the CBN exchange rate for their operations,” she said.
Akpani said accessing forex through the CBN window would enhance capacity and facilitate seamless supply of petrol and birth a regime of sustainability in terms of storage, distribution, and supply across the nation.
“The Nigerian National Petroleum Company (NNPC) Ltd., which historically served as the supplier of last resort, is now the major oil downstream company in Nigeria with the acquisition of OVH and has full access to dollars at CBN’s official rates.
“The NNPC also has access to products through swap arrangements,” she said.
Akpani decried the absence of a level-playing field that guarantees access to dollars for all marketers at official rates, and that having the NNPC as the sole importer of petrol was not sustainable, considering the huge consumption of the product.
According to her, strategic decisions must be made in the industry to ensure Nigeria takes full advantage of expected growth in oil products demand across Africa.
“For us in Nigeria, this will include full deregulation of the sector and a deliberate strategy geared towards creating an enabling environment for all petroleum marketers to add value, alongside the NNPC,” she stated.
Akpani said DAPPMAN considered the government’s plan to remove subsidy in 2023 as the right decision that would reposition the sector for sustainable growth and development.
She said the removal of subsidy would free up funds to shore up the capacity needed to transform the health, education, defence, and transportation sectors among others.
“As we approach the Yuletide and transition to the election year in 2023, the nation needs the full involvement of all operators to shore up capacity and ensure product availability at excellent service levels.
“While there might be fears regarding possible scarcity of petrol, DAPPMAN assures Nigerians of its ability and willingness to work assiduously to ramp up supply as the government addresses the challenges of forex availability in the sector,” she said.
The DAPPMAN boss lauded the Federal Government and the Nigerian Midstream and Downstream Regulatory Authority for emerging gains in the sector, especially, following the introduction of the Petroleum Industry Act.
“There have been important meetings aimed at shaping a sustainable future for the sector.
“These must continue as the success of the sector in the face of the intervening global energy crisis depends on collaboration and consideration of how operators can shore up capacity on the wings of market-friendly policies and a level-playing field,” Akpani noted.

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DAPPMAN Raises Concern Over FG’s New Tax Regime

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The Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) has expressed concern over the new 0.5 per cent tax on gross turnover of the petroleum marketing firms proposed by the Federal Government.
Executive Secretary, DAPPMAN, Mr Olufemi Adewole, said at the maiden edition of the Platforms Africa Continental Forum in Lagos, that the tax would put many firms out of business.
Adewole said there were indications that fuel distribution crisis may soon hit the country, if the government implemented the new tax regime.
He was emphatic that more than half of the fuel marketing firms in Nigeria would close down, if the tax burden was slammed on them.
According to him, the imminent closure of businesses poses threat to the smooth distribution of petroleum products across the country.
“The petroleum marketing firms’ trading margin is too small that they cannot pay such amount sustainably.
“Petroleum marketers operate a very low margin but the turnover is very huge. Unfortunately the margin does not correspond with the turnover,” said Adewole.
He added that the margins they made when fuel sold at N40 per litre was the same when the price rose to N160 per litre and N200 per litre respectively.
According to him, “The Finance Act 2020 says the marketers have to pay 0.5 per cent from their gross turnover by the end of this year.
“It is unimaginable that probably half of the petroleum marketing firms existing now may go under, if the new tax regime is implemented.
“Except the regulator which is Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) approves a new margin for the marketers.”
He said the association had called on government to give petroleum marketers access to foreign exchange at the official Central Bank of Nigeria (CBN) rate to enhance the supply and distribution of Premium Motor Spirit (PMS) across the nation this yuletide season.
According to DAPPMAN, shortage of foreign exchange (forex) coupled with several unauthorised levies, bad roads are among the factors making fuel importation and distribution burdensome for members.
The Tide source reports that the fuel marketers recently bemoaned the acute scarcity of forex in the official market, which is currently threatening the importation, distribution and impacting deeply on prices of petroleum products across the country.

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Niger Wants NNPCL To Establish Truck Transit Parks

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Niger State Government has urged the Nigerian National Petroleum Company Ltd. (NNPCL) to establish truck transit parks in some strategic parts of the state to reduce traffic on highways.
The government identified towns such as Tafa, Suleja, Mokwa, Bida, Tegina, Lambata and Minna as major areas to be given attention in that regard.
The Permanent Secretary in the Ministry of Mineral Resources in Niger State, Alhaji Abubakar Idris, made the call during the meeting of National Council on Hydrocarbons organised by the Ministry of Petroleum Resources in collaboration with the State Government.
According to him, the establishment of the parks in the identified areas will reduce traffic on highways and generate revenue for the state and country at large.
In the meeting entitled: “Roadmap and Strategic Option towards achieving energy transition in Nigeria”, Idris presented a memorandum from the State Government to the council on the need for the establishment of the transit parks.
He explained that it would also create a partnership between the state and federal government to reduce the negative effects of heavy road traffic on highways.
He explained further that the trucking industry was indispensable to the Nigerian economy as “truckers are responsible for delivering fuel from depots to filling stations where they are dispensed.
“For these reasons, funds need to be released to build truck parks for ease of operations”, he said.
He also called for the establishment of a frontier basin development commission with its headquarters in Niger State.
According to him, the establishment of the commission will expedite the effective implementation of Petroleum Host Community Trust Fund and frontier basin exploration fund as captured in the Petroleum Industry Act 2021 with headquarters in Niger.
He said Nigeria’s frontier basins consist of Anambra basin, the lower, middle and upper Benue trough, the South eastern sector of the Chad basin, the Mid-Niger (Bida) basin and Sokoto basin.
According to him, the basins would be better positioned for the opportunities in the hydrocarbons natural gas, oil and other minerals.
He noted that the establishment of frontier basin development commission would offer greater opportunities to actualise the state dream of oil and gas economic value-chain and industrialisation in Nigerian frontier basins.

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Motorists Groan Over Fuel Scarcity

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Long queues resurfaced in Lagos as motorists spent hours at filling stations to buy Premium Motor Spirit (PMS), popularly known as petrol.
The situation was worse on Ikorodu Road, Maryland, Ikeja, Anthony, Bariga, Ilupeju and Gbagada areas as motorists were agitated for spending hours on queues.
The Tide source reports that the development left commuters stranded with gridlocks in major areas of Lagos as motorists queued to buy the product.
The source also reports that only filling stations owned by Major Oil Marketers Association of Nigeria (MOMAN) had petrol and sell at the regulated price of N170 per litre.
Some stations owned by Independent Petroleum Marketers Association of Nigeria (IPMAN) sell between N200 and N210 respectively.
A motorist, who identified himself as Mr Foluso Saliu, told the source that he had been on the queue since 6.30 a.m. hoping to get fuel and return to work.
He said government should find a lasting solution to petrol supply in Lagos to avoid panic-buying.
“Scarcity has been frequent during the ember months and l hope it will be addressed,” he said.
Another motorist, Mr Julius Albert, urged filling stations to avoid selling petrol in jerry cans to allow vehicles to buy on time.
Albert appealed to the government to fully deregulate the downstream sector of the petroleum industry if that was the solution to availability of petrol without stress.
According to him, the product seems to be available in some filling stations but they choose to hoard it and sell at higher prices.
Queues were seen at Mobil, NNPC, Conoil, Oando and Nipco filling stations on Ikorodu Road.
Also, queues were cited at TotalEnergies, TMAAC on Bank Anthony Road and Conoil, opposite LASUTH.

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