By Buba Gagigo
Oil Marketing Companies (OMCs) have announced their decision to halt fuel sales starting Thursday, April 4, 2024, following a disagreement with the Ministry of Finance and Economic Affairs.
According to the OMCs, the Ministry’s unilateral decision to reduce the trader premium on Gas oil forex from $67.79 in March to $67.50 in April, despite the dollar trading at $68.50, has prompted this action.
“We, the Oil Marketing Companies (OMCs), have a sense of responsibility, as suppliers of petroleum products, employers, taxpayers, and as business entities, to inform all and sundry, the Ministry of Finance and Economic Affairs has unilaterally taken the decision to cut the trader premium on Gas oil, the forex, from $67.79 in March to $67.50 downwards in April, when the dollar is currently trading at $68.50 upwards.
“The ministry has also played with the densities of both gas and petrol to spread the effect of the changes they sought to cover at the cost of the OMCs,” they said.
Furthermore, the OMCs argue that adjustments in gas and petrol densities, along with reductions in dealer and transport margins, were made without considering rising fuel costs, operational expenses, regulatory standards, and municipal trading license fees.
The OMCs assert that the Ministry’s decision appears to be aimed at financing current road projects by increasing the NRA levy from D3 to D4.50 per liter. Despite these changes, the Ministry still garners D19.26 per liter on petrol and D17.23 per liter on Gas oil, which the OMCs believe could be more consumer-friendly.
“Thorough analysis showed that the Finance Minister and the Ministry are using the OMCs to finance the current road projects by increasing the NRA levy from D3 to D4.50, which constituted the mutilation. It is also important to let the public know that despite all these mutilations, Finance is getting D19.26 per liter on Petrol and D17.23 per liter on Gas oil which could have been much more reasonable and cheaper for the consumer,” they said.
Despite attempts to advise the pricing committee on making fuel prices affordable amidst declining international Platts prices, the OMCs claimed their suggestions were disregarded.
In light of these developments, the OMCs announced their decision to cease fuel dispensation effective April 4th, citing adverse terms and conditions detrimental to their businesses. They expressed their willingness to engage in dialogue with the Finance Minister, while apologizing for any resulting inconvenience.
“However, the OMCs would like to inform the general public that effective Thursday, April 4, 2024, they would stop dispensing fuels on terms and conditions detriment to their businesses since the pricing committee is being disabled. While requesting for dialogue with the Finance Minister, we apologized for any inconvenience this may cause,” they concluded.