Thread by @Donmartins_

So I've been seeing a lot if tweets about how PMS would increase to 310 should Buhari win next year elections and it just occurred to me that only few peeps on here actually put out credible information. So I'll just share my little knowledge on the petroleum industry;

Thread.

In 2016, FG put a stop to subsidy payments on PMS & asked all marketers to source their own forex and buy products, but in all not sell above N145/litre. The thing is, this worked for a while & then landing cost of PMS was around N100/litre, so these marketers were still

Making profits. But as time rolled by, so many marketers stopped importing citing forex constraint and increase in price of product at the international market, hereby making them rely on the state owned petroleum company NNPC/PPMC for refined products. With this development,

PPMC [a subsidiary of NNPC focused on the marketing of petroleum products] became the only importer of refined petroleum products in the country till date. So PPMC has a few suppliers it went into a contract called DSDP (Direct sale of Crude, Direct Purchase of Petroleum product)

With and the deal is they get lift crude [based on their individual aggrement] from Nigeria & in return bring in 3 cargoes of PMS or any agreed product every month back into the country {it's more like a trade by barter agreement}. There was a Tender process for this contract

And a few companies emerged as suppliers to PPMC. Now PPMC is the sole importer or refined products in the country & every marketer buys from them, PPMC sells to these marketers at the rate of N112/litre {last I checked} just so pump price can still be within the N145/litre as

Stipulated in the PPPRA template. The only issue here is that currently, landing cost of PMS is around N191/litre which sees the government running at loss.

The issue this administration is facing in regards to the petroleum industry & subsidy issue is that, though they stopped

Paying subsidy directly to marketers due to the corruption that rocked that scheme, they're technically still subsidising PMS by selling it to marketers at a reduced price, but don't just know how to explain this to Nigerians. When I saw the minister of petroleum trying to defend

This at the senate early this year say the subsidy was borne out if operational loss; though I understood this, but many Nigerians dont & in my mind I was like why can't you just break the whole thing down for the layman.

Now I don't subscribe to this policy but it is what it is

My proposed intervention to the matter would be that government should fully deregulate PMS, hereby making marketers sell at their own price based on how they buy & also reduce custom duties & ship & cargo dues to enable these marketers sell a bit cheaper.

While they focus on how to get the refineries running again [which I know they're trying to do because I've seen the process].

NB: Licenses for modular refineries were given out since 2016, but till date those that obtained these licenses are yet to commence construction.

In addition to this, you all can read about the DSDP contracts:

Nigeria's 2017 DSDP program slowly taking shape, long-list in place ...
spglobal.com › platts › oil

DSDP: NNPC, BP Sign PMS Supply Agreement > NNPC
nnpcgroup.com

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