Fatshimetrie
Every dawning day in Nigeria brings with it a series of worrying economic news, sending ripples of apprehension about how to make ends meet down the spines of most of us, except perhaps those who are permanently connected to inexhaustible sources of funds, such as politicians, clergymen and fleet operators, known as agberos.
These three categories of Nigerians seem to be the only ones immune to the painful effects of the economic policies of the government of the day. They are immune because the systems they operate in are designed to generate funds that they can spend at will, without hindrance, and the sums available are simply enormous.
At the heart of our current woes, as we all know, is the price of petrol, the fuel that powers travel and logistics in our oil-rich state. Any increase in the price of petrol is immediately reflected in the cost of travel, goods and services, especially food items. With the price of a 50 kilogramme bag of rice exceeding the N100,000 mark, one can imagine how many people in the country can afford a plate of rice, with or without protein garnish in the form of meat or fish.
We had all hoped that with the commissioning of the Dangote Refinery, the pump price of petrol would come down to affordable levels. With imported petrol, the following charges apply, which push up the cost of the product: 1. FOB Cost – N434.32; 2. Freight Cost – N86.48; 3. Insurance Cost – N10.58; 4. Tie Cost – N23.45; 5. Quayside Fee – N15.35; 6. Storage Fee – N12.58; and 7. Financing Fee – N34.67. Other charges are 8. Foreign Exchange Costs – N23.45; 9. APN Fee – N10.58; 10. NIMASA Fee – N5.29; 11. Customs Duties – N51.17; and 12. Other Taxes and Charges – N50.00.
It is quite logical to think that most of these charges should not apply to Dangote petrol, which baffles simple Nigerian minds like mine. If FOB and freight charges alone are subtracted from the landing cost of petrol since we now have an operational refinery here, it should be a saving of N520 on the price we are currently paying, which is a minimum of N998 in Lagos area alone. This should bring the cost of petrol down to N478, initially. Other charges that should not apply to locally refined petrol are numbers 5, 6, 7, 8, 9, 10 and 11, which are wharfage charges, storage charges, financing costs, foreign exchange costs, APN charges, NIMASA charges, customs duties and other taxes.
Adding these charges together, we get N203.09. Add that to 520, and we get N723.09. If this is deducted from 998, we get N274.91. In any case, we do not know the cost of refining and the profit margin to the refiner. If we knew, it would be possible to make an educated guess. However, leaving the whims of the refiner at a cost of N100, the realistic cost of a litre of locally refined petrol would be only N374.91. I submit that if a litre of petrol can be sold for less than N400 currently, Nigerians will heave a huge sigh of relief and see the effects immediately, as prices could then come down significantly.
However, there seems to be a determination on the part of the oil cartel to keep the Nigerian masses in perpetual misery and sink this economy by insisting that the charges that apply to imported petrol should also apply to locally refined petrol, thereby forcing us to pay a premium for this indispensable commodity. My concern is that they seem to have zealous accomplices within the ruling elite. Otherwise, why did Dangote, a few weeks ago, tell us that only the Federal Government can determine the price at which it should sell its petrol? Why is it so difficult for Dangote Refinery to tell the Nigerian public at what price it can sell petrol? Also, why was NNPC initially the sole buyer of petrol?
Then, the other evidences of this petrol row. The first is that crude is sold to local refiners in Naira. Good. The only thing this does to the value chain is to remove the stress of finding dollars to pay for crude. It hardly impacts the price if crude is still sold at the Naira equivalent of the dollar at current exchange rates. So, all the other refiners like WalterSmith Petroman, Edo Refinery and Azikel, when they fully join the market with their refined products, will they be saddled with all these insane charges? For what reason?
Let the Senate and House of Representatives, for once, stand up in defence of the average Nigerian and in the interest of the Nigerian economy, and remove these ridiculous charges on locally refined petrol. Petrol is kneeling on the neck of this economy and is suffocating it. This must not be tolerated. On the exchange rate, I urge those in power to simply ignore the World Bank which has said that rolling back reforms will be fatal to the economy. The recent trend in petrol prices and the impact on the Nigerian economy highlights an urgent problem that requires immediate and effective action. It is time for policymakers to act diligently and wisely to release the economic burden that is weighing heavily on the shoulders of Nigerians.