Petroleum Products and Deposits Traders Association of Nigeria says accessing foreign exchange at the official rate is a serious challenge for traders. Ms. Winifred Akpani, President of DAPPMAN, said this at a press conference in Lagos on Tuesday. Akpani urged the federal government to provide oil traders with access to foreign exchange at the official rate of the Central Bank of Nigeria to improve the supply and distribution of Premium Motor Spirits, also known as gasoline, throughout the world. country. She said that accessing foreign exchange at the official rate would boost fuel supply across the country. He added that the burden of obtaining foreign exchange through the parallel market for transactions domiciled in Nigeria had left oil traders in dire straits.
“Accessing dollars for our operations has been an insurmountable obstacle for oil traders. The difference between the CBN exchange rate and the parallel market exchange rate continues to widen,” he said. Akpani pointed out that, in addition to basic operating expenses denominated in dollars, oil traders were also faced with obtaining funds from the parallel market to pay tariffs and levies, some unauthorised, also charged in dollars. For example, to rent a ship to transport 20,000 metric tons of gasoline within Nigeria for 10 days, the shipping costs are denominated in dollars, which is equivalent to about 220 million naira at the official exchange rate of 440 naira. And a whopping N440 million for oil traders who have to get foreign exchange from the parallel market at N880. This implies an additional cost of N11 per liter for this transaction due to the official and parallel forex market spread,” he said.
According to her, for the same transaction, the pier fees, also charged in dollars, amount to 15.4 million naira at the official exchange rate and 30.8 million naira for oil traders who are supplied in the parallel market. “In addition, Jetty Berth is charged in dollars and amounts to N2.2 million at the official exchange rate and N4.4 million at the parallel market exchange rate. While port fees, collected in dollars by the Port Authority and the Nigerian Maritime Administration and Safety Agency, come to N71.51 million at the official exchange rate and N142.796 million for sellers that obtain foreign currency from the parallel market. DAPPMAN here the government to establish a level playing field in the access of traders in the sector to foreign exchange at the CBN exchange rate for their operations,” he said. Akpani said that accessing foreign exchange through the CBN window would improve capacity and facilitate the continuous supply of gasoline and bring forth a regime of sustainability in terms of storage, distribution and supply throughout the country.
“The Nigerian National Oil Company Ltd., which historically acted as a provider of last resort, is now the leading oil company in Nigeria with the acquisition of OVH and has full access to dollars at official CBN rates. The NNPC also has access to products through exchange agreements,” he said. Akpani denounced the absence of a level playing field that guarantees access to dollars for all marketers at official rates, and that having the NNPC as the sole importer of gasoline was not sustainable, considering the enormous consumption of the product. According to her, strategic decisions must be made in the industry to ensure that Nigeria takes full advantage of the expected growth in demand for oil products in Africa. “For us in Nigeria, this will include full deregulation of the sector and a deliberate strategy to create an enabling environment for all oil traders to add value, together with the NNPC,” he said. Akpani said DAPPMAN viewed the government’s plan to remove the subsidy by 2023 as the right decision that would reposition the sector for sustainable growth and development.
He said removing the subsidy would free up funds to bolster the capacity needed to transform the health, education, defence and transportation sectors, among others. “As we approach Christmas and transition to the 2023 election year, the nation needs the full engagement of all carriers to bolster capacity and ensure product availability with excellent service levels. While there may be fears about potential gasoline shortages, DAPPMAN assures Nigerians of its ability and willingness to work assiduously to increase supply as the government addresses foreign exchange availability challenges in the sector,” he said. The DAPPMAN chief praised the Federal Government and the Nigerian Midstream and Downstream Regulatory Authority for emerging gains in the sector, especially after the introduction of the Petroleum Industry Act. “There have been important meetings aimed at outlining a sustainable future for the sector. These must continue, as the success of the sector in the face of the looming global energy crisis depends on collaboration and consideration of how operators can shore up capacity based on market-friendly policies and a level playing field.” Akpani pointed out.