In a significant development following the recent removal of fuel subsidies, the Nigerian National Petroleum Company Limited (NNPCL) has issued a fresh circular to oil marketers, outlining the revised payment structure for petroleum products. This announcement comes approximately two weeks after the Federal Government’s decision to eliminate fuel subsidies, marking a crucial shift in the country’s energy sector.
According to a circular obtained on Sunday, NNPCL Retail directed oil marketers to consider consolidating their previous orders, which were based on the older fuel prices, in order to purchase a truckload of 45 million liters of petrol. Prior to deregulation, marketers had placed orders for a single truck at a cost of about N7.7 million.
The new circular advises marketers who had placed orders for three trucks at N7.5 million each (at the previous rate of N171 per liter) to either merge their orders or request a refund. NNPC Retail offered two options to assist customers in managing the impact of the increased cash flow requirement. Marketers can consolidate their pre-paid self-owned tickets into fresh tickets based on the revised pricing. Alternatively, they can opt for a cash refund by officially submitting a request to the Managing Director of NNPC Retail, including payment evidence and order details.
Oil marketers have confirmed the implementation of the new payment system, expressing concerns over the financial strain it may impose on their businesses. Mike Osatuyi, the Operations Controller of the Independent Petroleum Marketers Association of Nigeria, acknowledged the development but highlighted the difficulty many marketers would face in raising the substantial funds required to place an order for petroleum products. He questioned the feasibility of such a financial burden and suggested that instead of ordering a full truck, marketers might resort to purchasing smaller quantities, similar to the practice in the diesel market.
Osatuyi also predicted a significant drop in petrol consumption from the current estimated 66 million liters per day to as low as 30 million liters. This aligns with the views expressed by Tunji Oyebanji, a former Chairman of the Major Oil Marketers Association of Nigeria and CEO of 11 Plc, who emphasized the positive impact of ending fuel subsidies in curbing smuggling activities and revealing the actual petrol consumption in Nigeria. Oyebanji also warned that smaller downstream companies might face challenges and potential acquisition by larger entities as a result of the NNPC’s price adjustments.
The removal of petrol subsidies represents a pivotal decision for Nigeria, expected to address smuggling issues and provide a clearer understanding of the nation’s true petrol consumption. However, the implementation of the new pricing structure brings financial burdens for oil marketers, potentially leading to consolidation within the industry. As Nigeria navigates these changes, the long-term effects on the petroleum sector and the country’s economy remain to be seen.
- Nigerian National Petroleum Company Limited introduces new payment system for petroleum products, following fuel subsidy removal.
- Marketers urged to merge orders or request refunds to cope with increased cash flow requirements.
- Oil marketers express concerns over financial burden and potential industry consolidation due to the pricing changes.