How Subsidy Removal, Rise in Dollar Affect our Services — NARTO

February 23, 2024

4.3 min readCategories: Business



By Miracle Ogunde


The Association of Road Transport Owners, NARTO has said that the removal of fuel subsidy by the federal government and the rise in the cost of dollar are having negative effects on their services.


NARTO President, Yusuf Lawal, who stated this on Friday, said the union called off its industrial action following the intervention of the Federal Government.


He noted that the union is offering its services at a loss due to the cost of subsidy removal and the rise in the cost of the dollar.


Represented by the Union’s Coordinator of National Operations, Kassim Bataiya, at a meeting between the House of Representatives Committee on Petroleum Resources (Downstream), NARTO, and the Petroleum Products Retail Outlets Owners Association of Nigeria in Abuja on Friday, Lawal highlighted the critical role of truck drivers in the petroleum products supply chain.


According to Bataiya, the movement of petroleum products and supplies relies on petroleum tankers and trucks which makes the road too busy and prone to damage all the time.


“After nobody expressed willingness to negotiate with us, we had no option but to park the trucks and wait for further intervention. It is unfortunate that our services are not recognized by the Federal Government and even by the citizens of this country.


“Let me give you a typical example. We are paid N30 per litre to lift Petroleum Motor Spirit from Lagos to the NNPC depot in Suleja. N30 per litre of 40,000 litres is N1.2m.


“The truck consumes a minimum of 900 litres of diesel at N1,500 per litre which is about N1.450m, which is N250 above the fret rate.


“The N1.3m fret rate is subject to 5 per cent withholding tax deducted and payable to the Federal Inland Revenue Service, which is shared to the three tiers of government without even thinking or considering the drivers allowance, wages, salaries. So, it is difficult if not impossible for a transporter to load a truck from Lagos to any depot .


“The emergence of NARTO was as a result of the failure of NNPC now NNPCL to put our pipelines in operation. If we had our pipelines across the country which were designed to move petroleum products from where it was produced or imported to the various NNPC deports across Nigeria, we wouldn’t have these problems.


“We are happy that the committee invited us to this meeting at this crucial time in our nation’s history where our economy is faced with high inflation and the deteriorating exchange rate of the naira.”


While calling on the Federal Government to come up with policies aimed at alleviating the plight of truck drivers in the country, Bataiya explained that transporters in Nigeria, especially petroleum transporters, are working under extreme operational challenges which include the high cost of vehicle maintenance, the high cost of spare parts, road conditions, insecurity, and lots more.


“It is not possible for us to operate optimally because all the components of trucks today are import-dependent. We import tyres, batteries, spare parts, and even vehicles are imported at a high cost of the dollar exchange rate. Unfortunately for us, transportation is not even in the classification of dollar allocation.


“We are not entitled to apply for dollar allocation from the Central Bank of Nigeria to import the spare parts and accessories of the vehicle,” he added.


Speaking further, he noted thad “Recently, the Petroleum Industry Act was passed which signifies the end of the deregulated environment where the activities of the centre are left to the power of demand and supply. This implies that payment of transporters’ fret is left to be negotiated between the marketers and transporters.


“Remember that on May 29, 2023, the President in his inaugural speech announced the removal of fuel subsidy with immediate effect. Since then, the cost of transportation has remained the same.


“We have made all efforts as obtained in the Act to negotiate with the marketers with a view to arrive at a rate to assist us continue with the work we are doing to supply petroleum products across the country. All efforts to sit with the marketers proved abortive.”


Addressing journalists after a closed-door meeting with the the representatives of NARTO) and PETROAN, the Chairman of the Committee, Ikenga Ugochinyere, said that the meeting resolved to monitor closely the ongoing repair of the country’s refineries.


He said the committee also agreed with NARTO and PETROAN to investigate the activities of retail owners who pay for petroleum products and middlemen who sell the products to the real petrol outlet owners, which is the reason the price keeps rising.


“We also agreed to a stakeholders’ recommendation from NARTO, PETROAN and others to help in tackling some of the immediate and long-term needs in the industry to help ensure stability.


He also explained that the committee also agreed to take legislative action to look into how to reduce the freight cost by ensuring the dredging of the seaport that can open vessel landing corridors in other sectors apart from Lagos, Warri, Port-Harcourt, Calabar, and others.

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