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Petroleum marketers have expressed concerns that the instability in Premium Motor Spirits (PMS) prices may lead to an epileptic fuel supply in filling stations.

Despite the absence of fuel scarcity due to local refining capacity, filling station owners are hesitant to lift products from depots due to the unpredictable price changes.

According to the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Chinedu Ukadike, marketers lose billions of naira whenever PMS and diesel prices are reduced.

“The business of running a filling station has become more risky due to the price scare,” Ukadike said. “Everybody is trying to be very careful. It’s not that there is no product. There is availability of the product. But the price scare is what everybody is very careful about.”

Ukadike explained that when prices drop, marketers suffer significant losses, citing the example of the Dangote refinery’s entry into the market, which crashed diesel prices and forced marketers to sell below their cost of purchase.

“Sometimes, when the price goes down, you see people losing billions of naira. So, everybody is being cautious,” he said.

Contrary to the notion that marketers profit from price increases, Ukadike clarified that the only reason for raising prices is to meet the new market price, not to make excess profits.

“I want you to remember that when the price goes up, the marketers add more money, which is not profit,” he said. “They add money to be able to continue to purchase the product.”

Ukadike emphasized that marketers are scared of lifting fuels due to the risk of collateral losses, having secured loans from banks.

The IPMAN spokesperson expressed concerns about the huge financial resources required for the business, noting that small players are already exiting, leaving the market to the “big gladiators.”

“The business is becoming something else. Very soon, it will be left for the big gladiators. The volume of funds is huge. It’s not something somebody will just toy with,” Ukadike said.

He wondered how marketers could survive with such slim profit margins, citing the example of a N50m truck yielding a profit of only N300,000.

Ukadike predicted that the price instability may lead to an erratic fuel supply, rather than scarcity, as long as domestic refining continues.

Some marketers are contemplating dumping the Dangote refinery to import PMS from other countries, as the landing cost is now N922/litre.

The National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, however, stated that the association has decided to stop fuel importation to boost local refining capacity.

“The reality is that it depends on the transaction that you want to do. We had companies that were willing to import for us, and it was cheaper.

“But we also look at the local values. And that’s why we agreed to stop imports completely. Like I said, it’s a deregulated economy. And so the rules of the Petroleum Industry Act and deregulation will hold sway.

“But there is also the side of patriotism. There’s also the side of growing the local economy. So, you can’t be importing products that are 100 percent made from another country with different kinds of labour. What are the quality and the specs of that particular product? So those are questions that will come up,” Gillis-Harry remarked.

Gillis-Harry called on the government to support retail outlet owners with single-digit interest loans to prevent job losses.

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