*We are prepared to collaborate, says Executive Secretary*
Petroleum depot owners in the country have reiterated their commitment to supporting local refineries, dismissing claims that they prefer to import petroleum products over local options.
They also rejected the idea that their operations contribute to foreign exchange pressure and inflate petroleum product prices.
In a press briefing, the Executive Secretary emphasized that members of the Depot and Petroleum Products Marketers Association are dedicated Nigerian investors, having invested significantly in infrastructure across the downstream value chain to ensure efficient supply and distribution of petroleum products nationwide.
“It is absurd to suggest that depot owners aim to undermine local refineries,” he stated. “Any sensible business operation would naturally seek suppliers who offer products at the most competitive rates with minimal effort in procurement.”
“We would prefer to eliminate the cumbersome forex sourcing for our operations and instead purchase products from local refineries using local currency, particularly in response to recent directives from leadership.”
“Following the commencement of production at the Dangote Refinery, our leadership engaged in discussions with the company to explore supply options and arrangements.”
“Despite facing operational challenges, depot owners have already started leveraging the Dangote Refinery for their supply needs,” he added.
Regarding criticisms from certain industry players claiming depot owners add minimal value in the fuel distribution chain, he responded: “End-users can’t purchase directly from refineries; therefore, depots act as large-volume off-takers, facilitating the distribution of products to various retail outlets and independent marketers efficiently.”
“Understanding the dynamics of the downstream sector is crucial. Depot owners are not merely middlemen inflating prices; they are integral in sourcing and distributing products locally as long as specifications and terms are competitive.”
The Crude Oil Refiners-Owners Association of Nigeria recently leveled accusations against depot owners, suggesting their practices strain foreign exchange resources and elevate petroleum prices.
“Depot owners require foreign exchange, which contributes to price inflation by approximately N150,” stated a spokesperson from the association.
“Currently, independent marketers purchase products at N800. The absence of depot owners wouldn’t allow for sustainable pricing dynamics in the market,” he continued.
Challenging these claims, the Executive Secretary noted the critical role of NNPCL as the primary importer of PMS, highlighting their licensing process which impacts pricing. He pointed out that the costs of importation, influenced by foreign exchange rates, also reflect on the prices charged to marketers.
“Presently, NNPCL owes vast amounts to marketers related to these discrepancies,” he disclosed. “With accumulated interests, it’s unjust to blame investors for these economic realities.”
Concluding, the Executive Secretary asserted that regardless of whether products are sourced locally or imported, depot owners play an essential role in the value chain, facilitating the complex logistics necessary for getting products to end-users. All segments, including refining, distribution, and storage, contribute significantly to the sector’s functionality.
