NNPC Plans to Bypass PPPRA to Import Petrol

• Crude oil prices rise from one-week low as IEA predicts tighter market

Chineme Okafor in Abuja and Ejiofor Alike in Lagos with agency reports

The Nigerian National Petroleum Corporation (NNPC) is making plans to import the first batch of petrol for the first quarter of 2017 into the country without the usual quarterly petrol import allocation from the Petroleum Products Pricing Regulatory Commission, THISDAY gathered yesterday night in Abuja.

This is just as the PPPRA debunked reports of an imminent fuel scarcity in the country over unpaid N660 billion debt to marketers, as well as other sundry operational issues affecting the downstream petroleum sector.

According to sources in the NNPC and PPPRA, the corporation’s plans to import petrol would be done through the current naira to dollar exchange rate of N305 of the Central Bank of Nigeria (CBN), and without the apex bank compromising on the rate.

Usually, the PPPRA’s first quarter importation allocation for 2017 should have been out by December 2016 to enable marketers place their orders, but that did not happen.
It was gathered that this prompted the corporation which currently supplies up to 90 per cent of fuel consumed in the country and as such has minimal competition to begin to make plans for import.

While there are no indications of a pump price increase, a source at the NNPC explained that CBN would not give concession rate below N305 to any marketer to import petrol into the country.

He stated that the NNPC would have to defray all its additional costs of importation and still sell within the price band of N145 per litre which the government approved last year in its price modulation exercise.

The source stated that the initial arrangement reached with the CBN to provide foreign exchange to marketers for importation of petrol would still remains, but that the rate at which marketers would source for dollar was still going to be the official rate or inter-bank rate.

It was also learnt that stakeholders in the downstream sector recently met in Abuja with the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, NNPC management, and officials of PPPRA to find solutions to the challenges.
No statement as to what transpired at the recent meeting was made, even though there were expectations that journalists would be briefed.
The PPPRA in a statement yesterday said there was no truth in the report that the price of petrol is likely going to increase on the back of alleged debts to marketers.

It said: “The attention of PPPRA management has been drawn to the news stories and speculations in the media of an imminent fuel scarcity over marketers’ unpaid N660billion debt and other sundry issues.

“The stories under reference claimed, among others, that ‘fuel queues may return to retail outlets across the country anytime soon, following the federal government’s inability to settle marketers’ N660 billion debt’ and non-availability of foreign exchange (FOREX) to fund fuel imports.

“PPPRA wishes to state unequivocally, that these stories are gross misrepresentation of available facts at our disposal, hence misleading. For the avoidance of doubts, the National Petroleum Products Stock data and import plan, currently indicate that the country has two months petrol sufficiency, hence we want to assure motorists and commuters alike, that the products supply situation is robust and able to cater for the fuel needs of all Nigerians, pending when ongoing challenges are addressed,” it added.

It also stated that household kerosene remained fully deregulated as against insinuations that it was not.

The PPPRA thus said: “We hereby appeal to all Nigerians to remain calm and desist from any form of panic-buying, as we assure of our total commitment to adequate products supply and distribution across the country, in line with our mandate.

“We also appeal to all depot owners to adhere strictly to the subsisting truck-out principle in order to ensure that products get to retail outlets across the country in a seamless manner. The agency shall not hesitate to apply appropriate sanctions where necessary.”

Meanwhile, Crude oil prices rebounded from a one-week low yesterday as the International Energy Agency (IEA) said oil markets were tightening even before cuts agreed by the Organisation of Petroleum Exporting Countries (OPEC) and other producers took effect.

The IEA said while it was “far too soon” to gauge OPEC members’ levels of compliance with promised cuts, commercial oil inventories in the developed world fell for a fourth consecutive month in November, with another decline projected for December.
Reuters further reported that trading was relatively quiet early in the US session as traders awaited weekly inventory data from the US Energy Information Administration (EIA).

American Petroleum Institute (API) data on Wednesday showed US crude stocks fell 5.04 million barrels in the week to January 13, well above the expectations of a 342,000-barrel decline.
The data also showed much larger-than-expected increases in stocks of gasoline and distillates.

Benchmark Brent crude was yesterday up 68 cents, or 1.26 per cent, at $54.60 a barrel, after closing down 2.8 per cent in the previous session.
US crude was also up 68 cents, or 1.33 per cent, at $51.76 a barrel, having dropped to a one-week low on Wednesday of $50.91.

Oil prices have gyrated this year as the market’s focus has swung from hopes that oversupply may be curbed by output cuts announced by the OPEC and other producers to fears that a rebound in US shale production could swamp any such reductions.

The Head of the IEA, the energy advisor to the industrialised nations, Fatih Birol, said in Davos, Switzerland, that he expected US shale oil output to rebound by as much as 500,000 barrels per day over the course of 2017, which would be a new record.

Crude oil prices had initially slumped after Birol said that output from US shale producers would “definitely react strongly” to recent price gains.
He added that Brazil, Mexico and China would also bring more crude to market, making for “lots more” supply in the second half of this year and early 2018.

His statement dovetails with perceived skepticism about lasting support from OPEC’s supply reduction deal.
OPEC, which is cutting oil output alongside independent producer Russia for the first time in years, wants a lasting partnership with Moscow, Saudi Energy Minister Khalid al Falih told Reuters.
He also said extending the deal for a full year if the market rebalances was not needed.

The IEA sharply raised its 2016 demand growth estimate, and said the data indicated that rising demand was slowly tightening global oil markets.
But analysts insisted that it was crucial that OPEC and other producers cut output as promised, particularly as a resilient US shale industry threatened to add more barrels to the market.