…Insist PEF should be discontinued
By Louis Iba
Petroleum marketers have raised the alarm that Nigeria might be heading for another round of fuel scarcity as importers and marketers of petrol said a combination of factors, including the scarcity of foreign exchange (forex), the continuous payment of petroleum equalisation fund (PEF), the government ceiling on product’s pump price. They are also worried that an outstanding $950 million Letters of Credit (LCs) could mar the further imports and distribution of products in the months ahead.
“I think the PEF and the ceiling on prices should be stopped immediately if we have deregulated the industry so that marketers can know they are in a new business regime that offers no reimbursement or subsidy payment,” said a top official of an oil firm.
“In the North, the prices of raw foods and fruits is very cheap compared to when they are brought down to the South and no one pays an equalisation fund to government to bring food to the South from the North, so why still charge oil marketers and fuel importers PEF? This thing will force some of us to stop this business soon because it is not profitable,” added the official who preferred to remain anonymous.
Daily Sun also learnt that the total Letters of Credit matured obligation for petroleum marketers, especially members of the Depot and Petroleum Products Marketers Association (DAPPMA) and Major Oil Marketers Association of Nigeria (MOMAN), currently stands at $950 million, which is another threat to importers.
“The Federal Government must step in and take urgent steps to ameliorate this ugly situation,” a top official in one of the downstream oil sectors told Daily Sun. “In fact, the government must keep to its own bargain of the contract and ensure the debt is serviced at N197 per dollar because that’s the appropriate thing to do, otherwise, the entire downstream petroleum sector will die,” added the official who preferred to remain anonymous.
Only last weekend, Chairman/CEO of Integrated Oil and Gas, Capt. Emmanuel Iheanacho, while speaking at a stakeholders forum organised by the Lagos Chamber of Commerce and Industry (LCCI), warned that fuel supplies could be disrupted unless the government stepped in to address some lingering knotty issues.
“As things stand, there is no escaping the fact that nothing can work in the downstream unless marketers have ready access to forex within a well defined and organised forex market,” said Ihenacho.
“The continuous imposition of PEF is an unnecessary tax on trade and should be discontinued in the light of the need to minimise the market price of the products to which they relate,” he added.