TheCable

The Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN) says access to dollars at the official investors and exporters (I&E) window has been a great challenge.

Winifred Akpani, DAPPMAN’s chairman, said this at a news conference in Lagos on Tuesday.

TheCable had reported that the naira dropped to a new low of N885 per dollar at the parallel section of the FX market, also called black market.

The continued depreciation of the naira has been consistently linked to increased demand, while supply remains low.

Akpani, at the press briefing, begged the federal government to give petroleum marketers access to foreign exchange at the Central Bank of Nigeria (CBN) official rate, to enhance the supply and distribution of petrol across Nigeria.

She added that the burden of sourcing forex through the parallel market for transactions domiciled in Nigeria had left petroleum marketers in a dire situation. 

“Accessing dollars for our operations has been an insurmountable hurdle for petroleum marketers, Akpani said.

“The difference between CBN exchange rate and the parallel market exchange rate continues to get wider by the day.”

Akpani also said in addition to core operational expenses denominated in dollars, petroleum marketers also contended with sourcing funds from the parallel market to pay for fees and levies — some unauthorised — also charged in dollars.

“For example, to charter a vessel to convey 20,000 MT 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,” she said.

“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 and parallel market differential.”

For the same transaction, she said jetty fees, also charged in dollars, amounts to N15.4 million at official forex rate and N30.8 million at the parallel market.

“In addition, jetty berth is charged in dollars and comes to N2.2 million at official forex rate and N4.4 million at parallel market rate,” she added.

“While port dues, charged in dollars by the Nigerian Ports Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA), come to N71.51 million at official forex rate and N142.796 million for marketers who source forex from the parallel market.

“DAPPMAN, hereby calls on the government to establish a level playing field in the sector by giving petroleum marketers access to forex at the CBN exchange rate for their operations.”

Akpani further said accessing forex through the I&E window would enhance capacity and facilitate seamless supply of petrol.

She added that it would also birth a regime of sustainability in terms of storage, distribution, and supply across the country.

“The Nigerian National Petroleum Company (NNPC) Ltd, 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 CBN’s official rates,” she said.

“The NNPC also has access to products through swap arrangements.”

The association’s chairman decried the absence of a level-playing field that guarantees access to dollars for all marketers at official rates.

She said having the NNPC as the sole importer of petrol was not sustainable, considering the huge consumption of the product.

According to Akapni, strategic decisions must be made in the industry to ensure Nigeria takes full advantage of expected growth in oil products demand across Africa.

“For us in Nigeria, this will include full deregulation of the sector and a deliberate strategy geared towards creating an enabling environment for all petroleum marketers to add value, alongside the NNPC,” she said.