Marketers halts fuel importation amid forex crisis, set to sell at N720/litre
Leaders of the Major Oil Marketers Association of Nigeria, Independent Petroleum Marketers Association of Nigeria, and Petroleum Products Retail Outlets Owners Association of Nigeria have stated that if the price of the dollar stays between N910 and N950 on the black market in the coming weeks, the price of Premium Motor Spirit, also known as gasoline, will increase to between N680 and N720 per liter.
The marketers who talked on Sunday revealed that the lack of available foreign currency was forcing dealers who wanted to buy PMS to postpone their plans.
They claimed that despite boasting a reduced exchange rate of approximately $740/litre, the CBN Importers and Exporters official window for foreign exchange had remained illiquid and was unable to deliver the $25 million to $30 million needed for dealers to import PMS.
The marketers who spoke to Punch claimed that the shortage had caused dealers who had been keen to import gasoline to suspend their efforts.
They said that the recent depreciation of the naira was making Nigeria difficult for the product’s sole marketer, Emadeb, to recover its investment.
In order to resolve the problem, they urged the Federal Government to take action.
The Independent Petroleum Marketers Association of Nigeria’s Chief Chinedu Ukadike told Punch that because currency swings now determine the price of gasoline, Nigerians should prepare for a rise in price soon.
When asked if oil marketers were considering raising the price of gasoline, he responded,
“Once there is a slack in the naira against the dollar, there is going to be an effect. The demand and supply of forex is a key factor. We should also understand that it is not only petroleum products that use forex.
“Other manufacturers who import one thing or the other are also searching for dollars. So, the surge for dollars has continued to increase. So now that the dollar is hitting N910 to N940, and approaching N1,000, you should expect to buy PMS at the rate of N750/litre.
“It is simple mathematics, once the dollar is going up, have it in mind that the prices of petroleum products would definitely increase because the products are dollar-driven.”
Ukadike stated that oil marketers were still sourcing dollars from the parallel market, as the CBN’s Importers and Exporters official window was illiquid.
“Nigerians should brace for a price regime of between N680 to N720 if the exchange rate stays around N910 to N950/$, but the price is going to hit N750 once the dollar rises to N1,000.
“This is because marketers still source dollars from the parallel market, and not only marketers but virtually all importers in Nigeria. There is no subsidy any more on petroleum products, so you expect the cost to fluctuate with the dollars,” he stated.
The IPMAN PRO also stated that the Nigerian National Petroleum Company Limited was still the major importer of petrol into Nigeria, though another importer, Emadeb, imported the commodity recently.
“NNPC is still the major importer for now. One other company, Emadeb, imported products recently, but because this product is being sold in naira, getting back their funds is another issue since the naira keeps depreciating, while PMS imports is in dollars.
“This is why it is often difficult to go back and buy again as an independent importer. That is the problem we are facing,” Ukadike stated.
On when Nigerians would start seeing the price increase, he said, “NNPC is like the sole distributor of petroleum products now, so once you see a change in the price of petrol at their outlets, then other marketers will implement it.”
The Executive Secretary, Major Oil Marketers Association of Nigeria, Clement Isong, alluded to the fact the dealers were not importing petrol despite the fact that the government recently issued licences to about six marketers to bring in products.
Asked to speak on the import of PMS by other marketers and whether they were sourcing forex from the I&E window or the parallel market, Isong replied, “The I&E window is illiquid. There’s no money there.
“To buy products, it costs you between $25m to $30m. You can’t find it in the I&E window. So it doesn’t work and that is why people are not importing.
“We can’t find dollar again, you can’t find it right now. Nigeria has to sort out the security issues in the Niger Delta so that we can increase our daily crude oil output. If we increase it to 1.8 or two million barrels per day, then there’ll be dollar in the market. So we need to stop oil theft.”
On the apprehension of a possible hike in petrol price, Isong stated that this was inevitable if the dollar continued to rise against the naira, but noted that the government might have to intervene.
“Well, the President himself said in his speech that if they find petrol prices moving too high, they would intervene. We don’t want prices to move too high, nobody wants that.
“So if the dollar continues to climb, we are expecting some sort of intervention from the government based on what the President said,” the MOMAN official stated.
He further explained that PMS was different from diesel in terms of pricing because petrol was newly deregulated.
“The dealer that has bulk of the stock is the NNPC. So it influences the price in the market. Diesel, on the other hand, is different, because it has been deregulated for a very long time. So people will sell petrol depending on their cost structure, loans they took from the banks, forex, etc.
“Many things are put into consideration by dealers before coming up with their selling prices. There’s no one person who sets or controls the price. Nobody is controlling the price of PMS. Right now, NNPC, however, will continue to control the flow of the price. But after a while, that will stop,” Isong explained.