Federal Government Raises Petroleum Product Freight By 25% As NNPC Announce IOCs’ Divestment From Nigeria

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Alhaji Yusuf Othman, the national president of the Nigerian Association of Road Transport Owners (NARTO), has announced that the Federal Government has approved a 25 percent increase in freight rate for petroleum products. Initially N9.5 per litre, the new price would now be N11.87 per litre.   Although there has been an increase in the freight rate for petroleum products, the interest generated by this increase is being canceled out by the hike in the price of diesel as these vehicles that convey these petroleum products run on diesel. The NARTO national president thanked the government for approving the freight rate increase, but pointed out that it wouldn’t have made much of a difference due to the high cost of diesel. He said that he was positive that the price would impact their business soon, but if diesel prices continued to rise, they would have to go back to the government for renegotiation.   This is following IOCs’ divestment from Nigeria. The Nigerian National Petroleum Corporation (NNPC) Group Managing Director, Mele Kyari disclosed this while delivering his welcome speech at the 2022 Nigerian International Energy Summit (NIES2022) held in Abuja.   “companies are divesting, they are leaving our country, literally that is the best way to put it.” he said, “they are not leaving because opportunities are not here but because companies are shifting their portfolios where they can add value and not just that – but where they can also add to the journey towards carbon net-zero commitment.”   While the reason given by Kyari for the divestment has to do with the global climate policy on global warming, it must be recalled that IOCs have been saddled with dealing and curtailing operational, environmental and service challenges. these challenges may include pollution, kidnapping, pipeline vandalism, oil spills in Niger Delta, crude oil theft and inadequate pipeline infrastructure.   The freight rate increase would ultimately deal a huge blow in the downstream petroleum sector. Tanker drivers have decried working in a difficult business environment sighting bad roads and low salaries as making their work environment unfavorable. The NARTO president while addressing this said; “We are aware of the difficult conditions our members are operating in. We are doing everything possible to ease these difficulties. To this end, I am pleased to inform you that 25 percent increase in freight rate has been approved by the government. Though this might not be adequate but it is the best we can get under the existing PMS (premium motor spirit) Pricing Template of N165 per litre. “Bad roads have continued to be a stumbling block towards the safe and efficient movement of goods, services, and passengers throughout the country. Many reports have been received of delays in meeting up critical delivery deadlines, vehicle breakdowns and accidents due to bad road conditions throughout the country”. These recent developments have the tendency to affect the prices of AGO, PMS, MGO and DPK.      

              Source:  Oriental News, Daily Trust, The Cable.

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