The Nigerian Association of Road Transport Owners (NARTO) has called on the Federal Government to implement a 16% increase in freight rates for transportation of the petroleum products across Nigeria.
President of NARTO, Alhaji Yusuf Lawal Othman stated this at a press briefing on Thursday, saying that in year 2020, the Federal government through the defunct board of the Petroleum Products Pricing Regulatory Agency (PPPRA) had agreed to increase the freight rate by 26%.
He said that up till now, only 10% of the increment was carried out. Meanwhile, cost of operating the transportation business has increased tremendously.
Othman said that truck owners are groaning under harsh operating conditions and shortage of working capital for the running of their operations.
“As you are aware, one of our critical segment transportation of petroleum products is carried out under a regulated environment.
“The payment of freight is regulated by the Downstream, Midstream Regulatory Authority (DSMSRA) based on the overall PMS pricing template. Most often without due regard to prevailing economic and market conditions, worse still, these payments are received by transporters in arrears, usually 3-5 months after the products were delivered.
“In 2020, there was an approval by the defunct board of the Petroleum Products Pricing Regulatory Agency (PPPRA) to increase the freight rate by 26% for which the endorsement of the Hon Minister of State for Petroleum Resources was needed for implementation.
“However, the Hon Minister of State could not endorse the approval due to the obvious implication of its implementation that would result into either an outright increase in the pump price of PMS or lead to an increase in the subsidy on the product, neither of which the government was ready to do at the time.
“This situation generated a lot of tension in the downstream petroleum industry with strong possibility of industrial action from both NARTO and PTD/NUPENG. To douse this tension, the Group Managing Director (GMD) of NNPC intervened by suggesting two alternatives viz.
1. PPPRA to look into the possibility of accommodating an increase on the existing pricing template by reducing the share of government agencies on the template such as (a) PPPRA Funding, (b) NIMASA Charges, and (c) NPA Fees .
2. Revert to National Economic Council to inform it of the changes and the financial implication of the decision on the finances of the nation.
“Based on Presidential approval the first option was adopted by approving 10% to be implemented immediately while the balance of 16% was to be implemented based on the second option. To date this 16% is yet to be implemented” he said
The NARTO President argued that the current PMS scarcity is partly, caused by lack of funds to run the trucks profitably.
According to him, many transporters have decided to park their trucks, even as he warned that many more will park theirs in due course if something drastic about increasing the freight rate is not promptly done.
“We would like to notify the members of the public that while we sympathize with them over the inconveniences that PMS scarcity might be causing them, we are constrained to inform them that if the situation remains unattended we would have no choice but to park our trucks because we cannot continue to operate at a loss”