Oil marketers advise NIMASA, NPA to adopt Naira for port transactions

The Oil Marketers Association of Nigeria has urged the Nigerian Maritime Administration and Safety Agency (NIMASA) and the Nigerian Ports Authority (NPA) to obey the Federal Government's directive on Naira transactions for port charges.

This is contained in a statement by Mahmood Tukur, Vice Chairman II, Depots and Petroleum Products Marketers Association of Nigeria (DAPPMAN), on Sunday.

The federal government, through its downstream regulator, and based on an agreement reached with stakeholders, directed port charges to be collected in Naira.

The directives were contained in a communiqué issued in November 2021 and signed by the heads of the Nigeria Midstream and Downstream Petroleum Regulation Authority, the Nigeria National Petroleum Company Limited (NNPC Ltd), the Major Oil Marketers Association of Nigeria, and DAPPMAN.

Tukur alleges that the agencies were yet to comply with directives and continued to collect charges in dollars.

"The government gave directives that these agencies should henceforth charge marketers in Naira, but that had not been implemented." That's a major challenge.

"The dollar price is practically driven by demand; if there is no supply, obviously the price will rise." So, every time a vessel needs to berth, we have to pay port charges in dollars.

"But we are saying that it can be paid in Naira." That's one way of actually taking demand (for dollars) out of the market, which will cool the FOREX effects.

"If these products are consumed locally and intended for local ports, why are the NPA and NIMASA charging in dollars?"

"They should simply implement a directive given by the government, and we can assure that this will also bring down the price of petroleum products," Tukur said.

The statement also quoted the Chairman of the DAPPMAN, Winifred Akpani, as saying that the FOREX conundrum was affecting petroleum marketers.

She noted that to charter a vessel that could convey 20,000 metric tons of PMS within Nigeria for 10 days, freight charges are being denominated in dollars.

"That comes to about N220 million at the official FOREX rate of N440 and a whopping N440 million for petroleum marketers who have to source FOREX in the parallel market at N880."

"This implies an additional cost of N11 per liter for this transaction due to the FOREX official/parallel market differential."

"For this same transaction, jetty fees, again charged in dollars, come to N15.4 million at the official FOREX rate and N30.8 million for petroleum marketers who source from the parallel market.

"In the same vein, Jetty Berth is charged in dollars and comes to N2.2 million at the official FOREX rate and N4.4 million at the parallel market."

"Then there are port dues (NPA and NIMASA) charged in dollars, which come to N71.51 million at the official FOREX rate and N142.796 million for marketers who source FOREX from the parallel market," she said.

Akpani described the trend as "quite burdensome," which made operational expenses and procurement increasingly difficult for its members.

She stated that amid this inclement situation, petroleum marketers compete unfavorably with the NNPC, which has the upper hand.

She said the NNPC, historically the supplier of last resort, currently serves as the major oil downstream company in the country with the acquisition of OVH.

"Without a level playing field, especially one that guarantees access to dollars for all marketers at the official rate, marketers' ability to import products is continually and severely hampered."

"As a significant portion of their operations and critical operational and capital expenses are denominated in dollars,

"Full availability of products, particularly PMS, will experience a marked boost when access is granted to FOREX at the official rate for all operators and subsidies are completely removed."