NIGERIA: PRIVATE MARKETERS PLAN FUEL IMPORTS

C O N F I D E N T I A L LAGOS 002100

SIPDIS


E.O. 12958: DECL: 10/10/2008
TAGS: ECON EPET NI PGOV PREL
SUBJECT: NIGERIA: PRIVATE MARKETERS PLAN FUEL IMPORTS


REF: A. LAGOS 2090

B. ABUJA 1737


Classified By: POL/ECON FDAY for reasons 1.5 (b) and (d).



1. (C) Private marketers are planning to import fuel in the
coming weeks for retail sales in Nigeria. Managers at both
Texaco and Mobil report that making joint purchases of large
cargoes to reduce unit cost is preferable to smaller
deliveries. A Texaco official indicated his company would be
most comfortable buying with Mobil and Total, but those
details are still under consideration, and each of the six
major marketers is capable and willing to import cargo on its
own (ref A).



2. (C) A Mobil downstream manager told Econoff on October 10
that Unipetrol has two cargoes already in port. It appears
Unipetrol relied on earlier promises by President Obasanjo's
Petroleum Products Pricing Regulatory Authority (PPPRA) that
the downstream sector would be deregulated in October (ref
B). It purchased cargo and held to the delivery schedule
even as the strike was impending. It is unclear at what
price Unipetrol will sell this cargo, but the Mobil
representative signaled his company's intentions by saying to
Econoff "it is our position that the maximum pump price has
been lifted."



3. (C) The Mobil official discounted reports that the
industry agreed to keep fuel prices at 34 naira in the short
term (reftels). Referring to press reports outlining the
agreement, he said there apparently is "some question as to
who agreed to what" late Wednesday night. He stressed that
as far as his company is concerned, the downstream sector has
been deregulated pursuant to PPPRA directives and President
Obasanjo's comments, including Wednesday night's speech.
Offering proof of this interpretation, the company manager
told Econoff that prices in Port Harcourt and Calabar are
above 34 naira today, and opined that it is only in the
likely "demonstration zones" of Lagos and possibly Abuja that
gasoline prices remain at 34 naira. (Note: many stations in
Lagos are closed; apparently their owners are waiting to see
how the pricing situation will be resolved.)



4. (C) Texaco managers were more conciliatory about the
agreement in conversations with Econoff October 9, saying
that the Stakeholders Committee agreed that prices would stay
at 34 naira until private marketers' fuel arrived.



5. (C) We have been checking periodically with NGO's and the
presidents of NUPENG and PENGASSAN. The tension of impeding
strikes has lifted, and our contacts seem in good humor about
the state of affairs, but do not all realize how quickly the
Abuja agreement may be tested by the arrival in the market of
commercially imported, market price fuel. PENGASSAN thought
it would take at least a month for shipments to arrive, by
which time the Stakeholders' Committee would have a
deregulation plan all wrapped up. NUPENG thought commercial
imports could be here in two weeks, a more realistic
assessment, but NUPENG also believed that two weeks is enough
time to sort out deregulation. None of these contacts seems
aware of the two Unipetrol ships in harbor, but two cargoes
(not even two days of normal supply) will not, in our
opinion, cause waves. NUPENG's President Akpatason remarked
to us that many petrol stations have not rolled their prices
back to 34 naira as they were supposed to. He did not seem
quite ready to climb back on his warhorse over it; when asked
what might be done about it, he seemed to think it would be
rather difficult to identify the offending owners to berate
them.
HINSON-JONES