Fuel Price: Oil marketers Nigeria raises alarm over imminent increase
Owing to the continued scarcity of foreign exchange to finance the importation of oil products, Nigerians have been asked to prepare for another increase in the pump prices of petrol. Oil marketers say if not urgently addressed, the pump prices of petrol will not remain at the approved rates.
The United States dollar hit an all-time high last week, as it exchanged for N400 at the parallel market and in the process, making it difficult for the marketers to sustain their current mode of operations. The marketers have warned that if the situation is not urgently addressed, the pump prices of petrol will not remain at the approved rates.
Speaking to Pressmen on the issue, some oil marketers have declared that despite the competition in the business, it was becoming hard to retain the price of the Premium Motor Spirit (PMS) popularly called petrol within the approved range.
An oil marketer who pleaded for anonymity said: “It is important that Nigerians brace up for higher fuel price. The government does not have the money to fund this market. We are all aware that the price of crude has been falling in the international market and the government uses the dollar from the sale of crude oil to solve Forex problems. So, there’s no fast rule or solution to it than for all of us, both users and marketers, to just prepare for a price hike.
“For marketers, they should know that the days of higher profits are gone. Before now, if you want to import petrol, you’ll have to wait for months and possibly bribe some people to get an import licence. But those days are gone; nowadays, every interested dealer can get the licence and this has created room for competition, which is why you still get the product at around N140 to N145 per litre. We only hope that this will continue as the dollar availability improves.”
Also, another anonymous said the marketers were doing their best to manage the situation. He said that oil dealers hardly got Forex at the rate that the government initially promised them.
“It is very logical for fuel price to rise any moment from now, for there is no way somebody can import at the rate of N400 to a dollar and you expect him to continue selling at the official ex-depot price. Also, the government promised to facilitate Forex provision to marketers at N287 to a dollar, because you cannot buy at N400 and expect to continue selling at the prevalent rates you see at filling stations today. However, most depots are still managing the situation and are selling at the recommended price of N133.28 per litre to filling stations. It is when it goes above this price that you will notice the eventual increase in the pump prices of the PMS. So, if the trend of Forex unavailability continues, then the situation may go out of the control of the marketers,” he said.
Conversely, an official of the Independent Petroleum Marketers Association of Nigeria, Mr. Dibu Aderigbigbe, submitted that the Forex crisis might lead to a further hike in petrol price if it persisted.
“The dollar is the major legal tender used for the importation of petroleum products; so, any crisis in forex will definitely affect the prices of these commodities in the long run. However, we hope the situation is addressed in earnest.”
When contacted, the spokesperson for the Central Bank of Nigeria, Mr. Isaac Okoroafor, said since the flexible foreign exchange rate regime commenced, the apex bank made it clear that all transactions would be based on the prevalent forex market rate.
“As soon as we introduced the new flexible foreign exchange market, it was made clear to everybody that all transactions must go through that market. The only concession we made was that we agreed that the IOCs will sell dollars to petrol importers, but it must be at the prevailing rate of the market on the day of the transaction. What we have done for transactions concerning oil importation is that the IOCs are allowed to sell their foreign exchange to petrol importers, because oil is a very important commodity to the nation.
Two months ago, the federal government liberalised the downstream sector of the petroleum industry and announced an increase in the pump prices of petrol from N86 to N145 per litre. One of the reasons given by the government then was that the market was to be driven by the factors of demand and supply, saying it will now largely be in the hands of private sector players.
The minister of state for petroleum, Dr Ibe Kachikwu that the 2016 budget will serve as a short term palliative measure to cushion the effects of the policy on Nigerians has not yielded any positive outcome.