TheCable

The Independent Petroleum Marketers Association of Nigeria (IPMAN) says tariff increases on petroleum products may adversely hinder the success of the subsidy removal.

Debo Ahmed, the national president of IPMAN, spoke in a statement on Tuesday in Lagos.

He said increasing tariff can also have a negative impact on the downstream industry’s overall business climate.

According to the IPMAN president, the ‘arbitrary and exorbitant nature’ of the increases burdens existing businesses and discourages new investors while also creating obstacles in the way of their entry.

He said the public and consumers bear the brunt of the resultant cost.

“Those that are already in the business will pass the burden to the consuming public and definitely this affects the cost of products,” NAN quoted Ahmed as saying. 

“I think NMDPRA, as agent to the Federal Government, should advise them on the way to succeed on this removal of oil subsidy.” 

Ahmed said the recent increase in diesel pricing and the mounting unpaid bills emanating from the old petroleum equalisation funds (PEF) demonstrate the tangible impact on stakeholders in the downstream sector.

“In economics, payment of internal debts increase the economic activities of a country and lessen the attention given to the dollar,” he said. 

“When internal economic activities boom, it generates employment and spurs up the value of the local currency.

“IPMAN, as an association, will advise the authorities to critically look into the tariff increase, which will not help the oil subsidy removal.

“Between 2020 and 2023, NMDPRA had increased some, if not all, of its operational tariffs to over 600 per cent and added other unnecessary tariffs, generating lines to the already existing ones.” 

He cited the calibration per tank as an example, which was formerly charged at N20,000 per tank but is now charged at N150,000 per tank, or 650 percent.

He said pressure testing, which used to cost N20 000 per tank, also increased to N150,000 per tank.

Ahmed noted that both new and existing stations are facing significant financial hardships as a result of the cumulative effect of the tariff spikes. 

According to the IPMAN boss, renewing a license for an existing station could amount to over N2 million, while new stations might face expenses exceeding N4 million.

Ahmed also raised concerns about a proposed five percent tax on filling station sales and acquisitions, saying it may deter business mergers and acquisitions.

He said the goal of deregulation, is to draw in more investors, open the market, guarantee product availability, and give customers options, noting that the tariff increases are counterproductive.