 Welcome back and time to delve into our first major conversation right here on the breakfast. The Depo and Petroleum Products Marketers Association of Nigeria, Dapman, I'm sure you've heard about this organization already, yesterday they expressed concern over the new 0.5% tax on gross turnover of petroleum marketing firms which has been proposed by the federal government. The executive secretary of Dapman is a Lua Femi or Lou Femi Adeoli, now he said at the major addition of the platforms Africa Continental Forum in Lagos that the tax would put many firms out of business. He also said there were indications that a fuel distribution crisis may soon hit the country if the government implemented the new tax regime and he was emphatic that more than half of the fuel marketing firms in Nigeria would close down if the tax burden was slammed on them. This is something we're trying to understand and I'm glad to say we have one of the marketers in question joining us this morning on the program. He's a national public relations officer of the Independent Petroleum Marketers Association of Nigeria, Chief Chinadu Kadike, welcome back to the breakfast on Plus CV Africa. Great to have you. Good morning and good morning Nigeria. Tell us about this situation as regards the finance act 2020 that has been implemented by the federal government and it proposed 0.5% new tax. Is this on you guys who are marketing the marketers of these products or what? Who is to pay this particular tax? Well, whatever tax that is being imposed on petroleum products in terms of the down street sector, even upstream sector, definitely at the end of the day would be relatively heaped on the independent marketers, whatever you see that is at play in terms of financial lapses or in terms of irregularities in the financial industry will definitely at the end of the end in our petrol pump stations, even as well as the government is trying to some best petroleum products in Nigeria, but it's not easy on the federal government also and Nigeria's based on the problems of economic challenges and the effectiveness of petroleum products in tuning the domestic market differently, it never really what it is directly on us or directly on the importance of this petroleum product or directly on the people who the intermediaries, whatever it goes at the end of the day, the zero sum is that it will let you down on the pump pumps and Nigeria's are at the home. So tax is for citizens one way or the other in and out, whatever tax you have income tax, this tax, this tax, it is on citizens and it's on communities, it's on services. Okay, so this 0.5 percent is on your gross turnover, I mean we're talking about just 0.5 percent, how should that, that is not even up to 1 percent, why should that lead to to a delay or even a shutdown of your supply in the country by your members? No, if you look at what's going on now, you look at some of the expenses, most of our members, as far as those DAPMAN, I'm talking from the perspective of the DAPMAN, those who owns private tank farms and who buys petroleum products in bulk from the PPMC or the charges they incur, most of the charges have increased, you know, so and whatever charges that they incur in terms of collecting these petroleum products from the motor resources of PPMC to their own private tank farms, it has tripled. If you look at the vessels they normally use maybe around $6,000 to $7,000 to hire before, now it's almost $10,000 and all this is in dollar, there is no transaction within the business transaction of bringing vessels from the modern depots of PPMC to the tank farm that is not in dollar, the packages or triple charges of of some depots are also in dollar and once the dollar is increasing, definitely the cost of petroleum products will increase, so that is the essence of it and the government, so the very influence of government trying to supply these petroleum products for all of us, you know, to be able to get it at the pump price or post pump price is becoming a very conductive because since we are importing these petroleum products, like I said earlier, whatever is the relative exchange rates will also incur in our domestic supply of petroleum products, that is what we are suffering and that is why the price discrepancy is here and there. We're hearing that, you know, the suggestion is for the NMDPRE, the Nigerian Midstream Downstream Petroleum Regulatory Agency, or Nigerian Midstream and Downstream Petroleum Regulatory Agency, which is the successor to the DPR, needs to review the marketer's margin. What can you say to that? What exactly does this mean? Yeah, to a firm's understanding, it is very, very important at this point because we the marketers are almost operating on any cost because when the PMS was 165,000, our value for petroleum product was very, the financial responsibility was few and was not too huge. And now that the petroleum product is almost going to 170, 200 naira per liter, you also know that we borrow this money, some of us borrow this money from the financial houses, and you once there is increase in your turnover, and once there is increase in your demand or the volume of transactions, you also know the bank charges will also increase. So that is why you find it very, very difficult for most of our marketers to cope with the heavy investment of buying petroleum products. Like if you talk about gasoline, automated gasoline oil, which is agile. You cannot buy a private tanker of automated gasoline, agile, with less than almost 7 to 40 million naira. So if you put that kind of a good investment and your margin still remains 10 naira as stipulated by NDPR and PPRA, you cannot make any margin. How can you use 40 million naira and end of the day? Your margin is 10 naira, which is close to around 400,000 to 500,000 for 40 million naira investment. And you pay diesel, the diesel is very expensive now. Diesel is around 800,000. I use it to run your petroleum filling stations. You pay your workers, you pay government taxes. You also pay this your 0.1 in directly or directly from independent marketer. So you find that the independent marketer, some of us, our filling stations are not being closed. Since our filling stations are not being closed, we are now opting out to giving out our filling stations to those who have a financial model that can be able to run it. It's making the business and the huge investment, most of us who are in this business, we are no longer seeing profits as returns. So and because we are service oriented, the ordinary Nigerians who say this independent marketers are ill, who are profiteering, who are greedy, who doesn't want to open their filling stations to sell to the public, you know, whatever the financial arena is not even suitable for all of us. So you see the financial margin is very high every place I take. And the government need to do something to cushion the effect of the huge amount of money we are putting to keep ourselves in business. And the profit margin, because we are talking about this regulation, governments say they are doing positive regulation, they are doing food regulation, they are still regulating that there are three PPRs, there is still NDPR, no, no, no, yes, NDPR, who is the policeman of the industry and all the rest of them. These are all monitoring the engines, they are monitoring the independent market. If we are talking about the PPR market, you open the market, let the effects of the mine are supplied. But I mean how the prices go. You understand whatever I buy. All right, we seem to have a network interruption from our guests, I hope that. All right, Chief Okadike, if you can hear me, you are saying the margins are quite low. But we have seen an industry where your colleagues, you know, you in the industry, petroleum industry, the marketers, the retailers and even the depot operators, have increased the pump price from 165 naira, people are selling it almost 100%, if not more, in different parts of the country, 100, almost 100 naira increase rather, people are buying 250, 260, 270, some even 280 in parts of the country. So, what do you say to this? I mean, you have already given yourself, you have already done what you have been asking the NDPR to do, which is to approve an increase in the margin of profit for you, you have already given yourself that, because people are buying for you 250 naira. No, we have not. Sometimes when we go to the private tax firm to buy this petroleum product, we buy it at almost 200 naira per litre. We buy it at 200 naira per litre. We buy at one night something naira per litre. You understand me? We buy at one night something 200 naira per litre. You are flying this petroleum product from your finnish station, you spend close to 400,000 paying for transportation. And not only are you paying for transportation, all that services in your finnish station, you need to also take care of it. So, we have not done, we want something that we can do that is official, so that we are independent marketers who know our margin, because our margin would be built with all this, our cost of finance, our cost of transportation, our cost of managing the finnish station, and our recurring costs, and the taxis. You understand me? Even this which, you know, in our banks, banks take their charges too. So, all the cities need to, NNPC, all the federal government need to sit down with independent marketers who look at all the terrorism of all these causes. Even federal government cannot be able to manage their own cost, because now they are profoundly difficult to import petroleum product in the country. It's just because of high increase. What is the current XTEPO price today, as we speak? I don't think there is even any current XTEPO price, because the prices fluctuate. If you go to a different office or whatever they tell you is what you buy, and most of the PPMC facilities are not loaded, but that cost of the finance has not been loaded for more than two years now. Any group is not loaded. As the last time, as the last time you were aware, but as the last time, few was lifted for you and your colleagues, what was the XTEPO price that was charged? As the last time, when there is no mercy? No, no, no, no, no, no mercy. Yes? Okay, go on please, go on. No, let me get the question right, please. Okay, let's start from the normal XTEPO price under the normal price regime. What is it? Okay, if the customer started this issue of price regime, when he came in as minister, and this price regime was taken quarterly. Sometimes 12 was then at 97 Naira per litre, and as that XTEPO price, we are also buying at 3.0 something. Then he woke up one morning and said we are now in a price regime, we are now in positive deregulations, and all these are the policies that one government are now prepared to take off policies. And they read it in books, they would just come up with one thing or the other. And 12 was taken to 145 Naira. Okay, Nigerians, we said okay, if it's 145 Naira, no problem, and we can be able to buy. And see that our profit margin was still 10 Naira. 9.79 Naira, 70 something cover. Let me just approximate it 10 Naira. That was what our profit margin was. And if you are saying that you are doing positive deregulations, you are not supposed to put margin for us. And the filling stations, we are giving a range of 175, 146, 147 within that range. That is the bracket filling stations we are giving to set, depending on where you are and depending on your distance. Even I also want to tell you that because there is a vulnerability, most of the filling stations were even selling 143. Below what government have said, just for us to sell. We are profit oriented. We also want to sell out, do business. We are in a competitive industry. We also have the major marketers there. We also have the NNPC mega stations there. Even when the product are being sold to independent marketers at a very high price, you understand? And NNPC are still selling their product at 145 as at that time. We are in the independent market. We also manage to compete with them in this open market. From that level of origin, well, no longer when the NNPC wanted to try to increase petroleum products, the airport and all the rest of them started to agitate. But it would never cost inflation in Nigeria and all the rest of them. Pre-FMC depots became obsolete, became dried. We will no longer see, we will not go to private depots. We are now left in the hands of the private depots. Whatever will come and they say we should sell. So sometimes when we even pay, and they don't have products, when they bring product, they will have to pay the markup to be able to buy the product. So sometimes we pay above 160, 160. It keeps on going gradually. 175, 180. It is not the way that our independent marketers that will be able to monitor this or checkmate this. The petroleum industry has the police of the industry, which is the NDPR that are supposed to checkmate some of these SSS. We as members of the independent petroleum market we want to be in business, we want to keep servicing our finnish stations. And once we want to be in business, when you get to the depot, whatever the price you see at that particular point in time, that is why you buy. If you go to work, where products are being sold at 205, 210 in the private depots. I am not accusing that man, I am not accusing NDPC. But as independent marketers, we go to buy this petroleum product. If government is not aware of what is being done, while the NDPR has no crap of finnish stations, or what they see finnish stations and say, you put a saleable company, you put a profiteer. They start the policemen and they know the intricacies of what they are passing through. They know what the independent marketers are suffering. We cannot just epitrally, because there is no arm's length that you don't see an independent marketer. So when you sell something that is not conformity with what other people are buying, nobody will enter your finnish stations. We do a lot of things to be able to keep our business good. We clean glasses. We sometimes, we even wash cars. We dash counts. We dash pay hundreds of them. Too long market has to buy our products. Okay, so your challenges are well documented. Thank you for pointing these out. What is responsible for the current increase in the pump price? You've already talked about, you said you pay about 200 Naira as X-Tepo price or not be taken apart from other charges. What's responsible for this? Because officially we still have a regulated downstream sector. What is responsible for this? It's also what is responsible for the high rate of dollar in Nigeria. What is responsible for this? Because Nigerians use, the federal government use dollar to buy this petroleum product, to import this petroleum product. The petroleum product is an imported product. We don't no longer find petroleum products in Nigeria. We depend solely on imported petroleum products. And as you have your television before you, that you bought last year 75,000. This year if you go to the market around 100,000, that's 5,000. It's the latest cost in all items that have been imported. Even including local items that are here in Nigeria that have been produced. Because most of the productions use imported raw materials to be able to do that. So if you ask me what is, why is the fuel high? You also want to reconcile. Why is dollar high in Nigeria? Why is dollar is increasing everywhere? Any day you see that dollar is coming down, petroleum product will come down. Because we are evenly dependent on importation of petroleum products in this country. We don't have, we don't checkmating our imports. Because for the final risk that are here in Nigeria, are no longer working. Those people that government has also given licenses to do refinery are not forthcoming. So the essence of regulating price of domestic supply of petroleum products in Nigeria does not have a checkmate. We have an experiment. We must have a control. When we are imported, we must have control. A local refinery that can be able to determine price, that where people can be able to go and buy this product at 145 Naira, as step up price, as government has declared it. And if government continue to produce at that 145 Naira, and people are seeing this product, and the product is adequate enough, I think what I'm talking about, what you are talking about, the issue of importation, and the issue of increase in price, and the issue of dollar in Nigeria, we step aside. And I also want to let you know that the problem of Nigeria economy is that we are evenly dependent on importation of petroleum products. If this issue is addressed, you will find out that our Naira will gain value. And the poor masses will not suffer these things we are suffering today. All right. Finally, this syrup of 5% tax, instead of it leading to a crisis in the supply of fuel in the country, is it not in normal business practice that any increase in taxes is transferred to the end user, the ultimate customer, the buyer, which is me. So instead of not supplying, can't you transfer the cost to me, the less of fuel? Well, like just what you said is in practice, is very, very simple. Because the government is preparing itself to deregulate petroleum products in Nigeria. I also want viewers to understand that we get up to the worst, because with this thing, the importation of petroleum products if you calculate it by the market value, by the international standard, you cannot be buying petroleum products in Nigeria less than 500 Naira 450, with the rate of Nigeria Naira in the markets today. You cannot. It's not possible. Why are we lying to ourselves? Why are we lying to ourselves? To the customer, to the end user, can this be transferred to those who are at the retail points Yes, we need to get up for the worst. So the first thing government need to do for us is not about taxes. It's about refining refineries. What stops Nigeria from getting a new refineries? What is that? Because the experts have it at around 10 to 5 billion, you have a modest refinery, billion dollars, you have a modest refinery that can be able to produce. The money we have spent on subsidy is enough to be able to get some brand new refineries that can be able to take care of these obsolete ones that are all three years when the Minister will tell us that in the last six months we have 70% productivity. These are all those years of stories. You still go to that place, nothing is happening. The place is so as cold as a graveyard. So how can we not say we have to be... Why are we taxing ourselves? What are we taxing ourselves for? It's still the chance that we pay the tax. Whatever tax, no matter how it's been said, no matter how it's been come... My brother, me and you, we are ready to pay for those taxes. All right, obviously... Not well. Obviously, maybe Dapan is repairing the mines of Nigerians to anticipate an increase in the pump price. I mean, we talk about the regulated downstream sector. It's already deregulated because the prices are higher than regulated prices. So maybe we should just tell ourselves the truth. But it's quite sad to see that we are in this situation because of poor financial management. You talked about financial management in the country. I mean, today we are seeing in the news that they can't even explain 206 billion in settling into the budget of the Ministry of Humanitarian Affairs. All these taxes are meant to help governments run because they don't have money. So they're trying to look for where they can find money from. But the question is, are they using these money judiciously? Or are they just using it anyhow? And now they come back to tax Nigerians more. And people are keeping quiet. And we'll pay. We'll pay. And just... The problem of Nigeria is lack of responsibility. We don't take responsibility for actions we have taken in government because nobody believes that maybe after four years we just go home and start taking acronyms from international community, traveling here and there and all the rest of them. If Nigeria's our political culture is that when you finish your administration you will be compelled to come back and ask questions. Everybody will ask you questions and you take responsibility for your actions and inactions in government. And you take some political measures. That's why we'll also have those used to take very, very erratic, not erratic, very, very reason. All right. Chief Chiridu Kadike, thank you so much for your time and for giving us insight into what's been going on in the sector. Here's the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria. We'll take a break now. And when we come back we have more discussions ahead, including Nigeria being told by the World Bank that it's an urgent need of strengthening its financial or fiscal management including other things, ending the fuel subsidy regime. We'll see what our guests will have to say about that when we come back. Please stay with us.