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Energy

Oil marketers say non availability of forex still affecting importation of petrol

Inability to access foreign exchange is affecting oil marketers’ resumption of importation of products.

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11 Plc (formerly Mobil Oil Nigeria Plc) declares dividend of N8.25 per share

The oil marketers have revealed that their non-resumption of importation of the products is due to their inability to have access to foreign exchange.

According to a report from Thisday, they said that it has become a huge challenge to source dollars from the official market due to its scarcity and going to the black market is not an option because of the huge cost.

READ: FG to launch policy to prevent smuggling of mineral resources

This development comes months after the Federal Government announced the removal of petrol subsidy with the deregulation of the downstream sector of the oil industry and the expected resumption of petrol importation by the oil marketers.

The Nigerian National Petroleum Corporation (NNPC) through its subsidiary, Pipeline and Products Marketing Company (PPMC), had been the sole importer of petrol in the country.

READ: CBN’s Export Proceed Number causing huge setback for exporters

The oil marketers, which includes the Major Oil Marketers Association of Nigeria (MOMAN), the Independent Petroleum Marketers Association of Nigeria (IPMAN), and the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) still depend on PPMC for the supply of most of the products.

READ: FG to begin online registration, monitoring of petrol stations, depots

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What they are saying

The Chairman of MOMAN, Adetunji Oyebanji, said:

  • Nothing has changed. The forex issue is still like that. And as you can see, the government has also extended that DSDP (the exchange of crude for refined petroleum products) arrangement. That’s a signal to you that foreign exchange may not be there for us to access.’’

READ: FG to revive 3 power projects in Abia by first quarter 2021

The Managing Director of Financial Derivatives Company, Mr Bismarck Rewane, had also pointed out that apart from petrol pricing, one other element of petroleum marketing that had not been fully deregulated was access to foreign exchange.

He explained that private importers of petroleum products do not have access to foreign exchange, leading to the continuous monopoly by the NNPC in the country’s petrol importation.

READ: Port Harcourt Refinery to get a facelift in Q1 2021 – NNPC

What you should know

The Federal Government had announced plans to make foreign exchange available to oil marketers, in order to make the importation of petrol into the country competitive, reduce the rising cost of the product and stop overdependence on NNPC for importation.

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READ: Nigeria saved N670 billion from petrol importation in 6 months

This follows the meeting of the oil marketers with officials of the Federal Ministry of Finance on the need to make the foreign exchange available for petrol imports.

However, weeks after the pronouncement, it appears nothing has changed as the oil marketers are still experiencing some difficulties in assessing foreign exchange at the official rate.

Chike Olisah is a graduate of accountancy with over 15 years working experience in the financial service sector. He has worked in research and marketing departments of three top commercial banks. Chike is a senior member of the Nairametrics Editorial Team. You may contact him via his email- [email protected]

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Columnists

What FGN Free Meter Program means for the power sector

Without effective penalties for erring DisCos and consumers, progress may still remain very slow.

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Electricity, Buhari moves against Discos and agents that collect money for prepaid meters

According to news reports, the Minister of Power, Mamman Saleh on Wednesday said the distribution of the four million free electricity prepaid meters pledged by the Central Bank of Nigeria would soon begin across the country.

According to him, the government is wrapping up the distribution of its initial one million meters, which he labelled phase zero, and would soon begin the distribution of the four million sponsored by CBN, which he tagged phase two. He also noted that the Federal Executive Council approved N3bn for the execution of six major electricity projects in the country to upgrade Nigeria’s electricity facilities and improve power supply across the country.

Ineffective metering remains a major drawback to the success of power sector reforms in Nigeria. While some consumers avoid paying for power consumed through meter bypass, some other consumers are made to pay for what they have not consumed through estimated billing by DisCos.

DisCos have been largely unsuccessful with metering their customers.

As far as inadequate metering is concerned, DisCos over time, have used this situation to their advantage via estimated billings. It appears that fully metering customers are currently being viewed as a disincentive, given that estimated bills can easily be manipulated.

According to a report by the Nigerian Electricity Regulatory Commission (NERC), only 4,234,759 (40.27%) of the total customer population of 10,516,090 were metered as of 30 June 2020. Clearly, this validates the widely held view that there are a wide number of customers on estimated billing which gives room for illegal connection to the networks and in turn corrupt practices. NERC further revealed that only three out of 11 Electricity Distribution Companies in the country had metered more than 50% of electricity customers under their coverage areas as of June 2020.

Effective metering in our view is one step ahead in solving the myriad of problems embattling the Nigerian power sector. Though supposed to be unpaid for, many customers in a bid to avoid the bureaucracy associated with getting meters have paid to get their own meters. We believe the provision of meters to all end-use customers will go a long way in ameliorating the liquidity squeeze in the power sector whilst also providing cashflow to the DisCos for investment in equipment needed to evacuate unused electricity to consumers nationwide.

We laud the FG’s efforts at distributing meters freely to end-users, but we note that without effective penalties for erring DisCos and consumers, progress may still remain very slow.

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CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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Energy

BUA Group awards contract for polypropylene plant in its refinery project

The completion of the project is to help boost Nigeria’s capacity to meet the country’s increasing demand for petrochemical products.

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BUA Group chairman, Abdulsamad Rabiu, African Continental Free Trade Agreement, AfCFTA, CCNN

Nigeria’s leading indigenous conglomerate, BUA Group has announced that it has signed a contract agreement with Lummus Technology for the establishment of a polypropylene plant in its refinery and petrochemical project.

The completion of the project is to help boost Nigeria’s capacity to meet the country’s increasing demand for petrochemical products.

The Chairman of BUA Group, Abdul Samad Rabiu, while disclosing the contract agreement, expressed confidence in the capacity and technical expertise of Lummus Technology to deliver a best-in-class project.

READ: BUA says its export-focused sugar project will create jobs and checkmate price hike

What the Chairman of BUA Group is saying

Rabiu in his statement said, “We are pleased to sign this polypropylene contract for our BUA refinery and petrochemicals project with Lummus Technology, a world leader in delivering polypropylene solutions, which will solve the increasing demand for high-performance grade polypropylene in Nigeria, the Gulf of Guinea as well as the Sub-Saharan Africa Region.

“We are confident in the capacity and technical expertise of Lummus Technology to deliver a best-in-class, 285,000 tpy polypropylene unit for our refinery project scheduled to come on stream in 2024.’’

READ: Dangote, BUA reconcile over sugar plant dispute after meeting with Ganduje, others

What the President/Chief Executive Officer of Lummus Technology is saying

On his part, the President/Chief Executive Officer of Lummus Technology, Leon de Bruyn, said that he was looking forward to working with BUA refinery on the project.

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Leon said, “We look forward to working with BUA Refinery on this critical project and supporting the first Novolen polypropylene unit in Nigeria. Our world-class Novolen technology is well suited to meet Nigeria’s increasing demand for the growing petrochemical products market.

It offers a flexible range of industry-leading products for all PP applications, and the industry’s lowest overall capital and operational costs while providing customers with high process reliability and flexibility in responding to market needs.”

READ: BUA Group, French company announce progress in 200,000 bpd refinery project

What you should know

Lummus Novolen Technology GmbH licenses polypropylene technology and provides related engineering and technical support/advisory services. Novolen also supplies NHP® catalysts for the production of high-performance polypropylene grades in the Novolen process, and NOVOCENE® metallocene catalyst for the production of special polypropylene grades.

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