Oil marketers in Nigeria may have made an excess of N21.8834 billion in a day following the removal of subsidy on Premium Motor Spirit (PMS) popularly called petrol or fuel investigation by Saturday Telegraph has revealed. President Bola Tinubu had in his inaugural address as the 16th President of Nigeria declared that the petrol subsidy was gone.
The Nigerian National Petroleum Company Limited (NNPCL) subsequently increased its petrol pump price template from between N184 and N194 to between N488 and N550. Using the last published PMS weekly evacuation and dispatch report of NNPCL, the average daily evacuation/dispatch for the week of April 1-7, 2023 was 68.39 million litres; while that of the week of 25th to 31st March 2023 was 73.71ml.
With the addition of 68.39 million litres and 73.71ml, the total is 142.10ml resulting in an average of 71.05ml. The NNPCL stations prior to the price adjustment sold at the pump price of about N184 while some marketers sold at an average of N200. The average of the two is N192. Multiplying the estimated 71.05ml by N192 equals N13.6416 billion.
With the current template, using N500 as a base will give a total of N35.525 billion. Subtracting N35.525trn from N13.6416 equals N21.8834 billion But the Executive Secretary of the Major Oil Marketers Association of Nigeria, (MOMAN), Mr Clement Isong, in an interview with Saturday Telegraph, said the NNPCL did not make extra profit.
He stated that NNPCL was selling at a subsidised rate instead of the actual cost but is now selling at the actual market rate. Isong also explained that other marketers should not sell their stock at such a price that they would not restock at the same quantity.
He noted that it is important for businesses to stay afloat rather than for the operators to sell at a loss, go out of business and become poor and hungry. Isong said: “NNPCL’s old stock was bought at a higher price and they were selling it at a subsidised rate.
“The old stock was not cheaper. It was higher. They were buying at N10 for instance and were selling at N5. “If you say they have old stock, was the old stock not N10? Are you suggesting that they should continue to take the loss that has reached about N2.7 trillion or lose more? “That old stock was more expensive than what they were selling it and now they want to sell the old stock at the correct price so that they can reduce the burden on the country and the burden on our collective future.
“With respect to the man that has one filling station, to buy a truck of PMS costs him about N8.3 million. “Maybe his profit was N300,000.00. Today that product is N488 in Lagos multiplied by 450,000 litres in a truck, which is N22m. Where will he find the N22 million to replenish his stock if he sells at N8 million? “Every businessman, buys, sells, and monitors his replacement cost so that he will have working capital to stay in business.
“If he finishes selling the product at N8m and so does not have money to buy the next quantity of stock, will he keep the N8 million in a bank account, sit down and have nothing to do? “The station will be dry. Businessmen that behave like that are the ones that run out of business. Every good trader, in any business line, in the world, knows this.
“It is not the profit that you are looking at, it is your continuing in business that you are looking at and you need the working capital to buy what you are selling, whether it is shoes, trousers, cars or food. “If you do not generate the money to buy your replacement stock, especially when the jump is this high, that businessman will run out of business and nobody will pity him.
He will only pity himself. “He has to look after himself. He has to be in business and if at the end of the day, he goes out of business, it will not be good. We want him to stay in business. “We do not want him to run dry and become another hungry mouth in Nigeria.”