Oil Marketers Urge NIMASA, NPA to Obey FG’s Directive on Naira Transactions

*Say situation increasing petrol prices at the pumps

Emmanuel Addeh in Abuja

Oil marketers under the auspices of Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN) at the weekend urged the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigerian Ports Authority (NPA) to obey the federal government’s directive on naira transactions for ports charges by its members.

Second Vice Chairman, DAPPMAN, Mahmoud Tukur, who made the call, stated that despite the directive of government to NIMASA and NPA about a year ago, both agencies had yet to comply with allowing naira payments instead of collection of dollars.

The heads of the Nigerian Midstream and Downstream Regulatory Authority (NMDPRA), Nigerian National Petroleum Company Limited (NNPC), the Major Oil Marketers Association of Nigeria (MOMAN) and DAPPMAN had in November 2021 signed the deal.
The government, through its downstream regulator and based on the agreement among stakeholders, had directed that ports charges should be collected in naira.

But since last year, both NIMASA and NPA had continued to collect the charges in dollars, according to DAPPMAN.
 “Some years ago the vice president chaired a meeting which included the chief of staff, talking about the fact that marketers having to pay port charges to NPA and to NIMASA in dollars was no longer acceptable because it was affecting the sector.

“A directive was given that these agencies should henceforth charge marketers in naira, but that has not been implemented. That’s a major challenge.
“The price of dollars is practically driven by demand. If there’s no supply, then obviously the price will rise. So in this instance, every time a vessel needs to berth, we have to pay ports charges in dollars,” he stressed.

While noting that the flouting of the order remains an anomaly, DAPPMAN noted that the development has increased the current pressure on the naira, arguing that if the products are consumed locally, there was no need to pay in dollars.

 “But we are saying that it can be paid in naira. That’s one way of actually taking demand (for dollars) out of the market and it will cool the forex effects.
“If these products are consumed locally and are destined for local ports, then why is the NPA and NIMASA charging in dollars? They should simply implement a directive given by the government and we can assure that this will also bring down the price of petroleum products,” DAPPMAN argued.

On her part, the Chairman, DAPPMAN, Winifred Akpani, explained how the foreign exchange conundrum was affecting petroleum marketers.
She said: “For example, to charter a vessel to convey 20,000 metric tonnes 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/parallel market differential. For this same transaction, jetty fees, again charged in dollars, comes to N15.4 million at official forex rates and N30.8 million for petroleum marketers who source from the parallel market.
“In the same vein, jetty berth is charged in dollars and comes to N2.2 million at official forex rate and N4.4 million at parallel market rate. Then there are port dues (NPA and NIMASA), which are charged in dollars, which come to official N71.51 million at official forex rate and N142.796 million for marketers who source forex from the parallel market.”

Akpani described this as a huge burden which had made operational expenses and procurement increasingly difficult for DAPPMAN members.
She stated that amid this inclement situation, petroleum marketers still must compete, rather unfavourably with the NNPC which has access to forex at the CBN exchange rate also has the added advantage of getting products through swap arrangements.
 “The NNPC 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 Central Bank of Nigeria (CBN) official rates.

“Without a level-playing field, especially one that guarantees access to dollars for all marketers at official rates, marketers’ ability to import products is continually and severely hampered, as a significant portion of their operations and critical operational and capital expenses are denominated in dollars.
“Full availability of products, particularly petrol will experience a marked boost when access is granted to forex at official rates for all operators and subsides removed completely,” she argued.