Forex Scarcity: Why consumers may buy  petrol at N720 per litre soon –Oil Marketers

*Nigerian major oil dealers, including IPMAN and MOMAN, urge energy consumers to prepare for fresh fuel price hikes of between N680 and N720 per litre, ‘unless the local currency Naira appreciates’ in the coming weeks

Isola Moses | ConsumerConnect

The far-reaching socio-economic effects of the recent deregulation of the downstream sector are yet to subside as oil marketers Sunday, August 13, 2023, indicated that consumers may buy Premium Motor Spirit, popularly called petrol between N680/litre and N720/litre in the coming weeks.

ConsumerConnect reports the fuel marketers have attributed their projection to Dollar continuing to trade from N910 to N950 at the parallel Foreign Exchange (Forex) market.

The oil dealers seeking to import PMS are being forced to put the plans on hold due to Forex scarcity for product importation.

It should be noted that Naira, the Nigerian currency, crossed the N900/Dollar ceiling recently.

The naira also sold at over 945/Dollar last Friday, in the parallel market.

Core reason oil dealers can’t import petrol, by marketers

Oil dealers reportedly said the Central Bank of Nigeria (CBN) Importers and Exporters (I&E) official window for foreign exchange, which boasts a lower exchange rate of about $740/litre, has remained illiquid and unable to provide the $25m to $30m required for the importation of PMS by dealers.

This Forex situation has led to the suspension petrol importation by dealers, who though were initially eager to import the commodity, according to report.

Operators also hinted that Emadeb, the only marketer, who imported the commodity recently, has also been finding it tough to recoup its investment due to Naira depreciation.

Fuel price hike imminent unless….

Meanwhile, senior officials of major oil dealers, in separate interviews Sunday, August 13, said PMS price hike was imminent unless the local currency appreciates in the coming weeks, The Punch report said.

What Federal Government needs to do to stabilise oil market

Leaders of the Major Oil Marketers Association of Nigeria of Nigeria (MOMAN), Independent Petroleum Marketers Association of Nigeria (IPMAN) and Petroleum Products Retail Outlets Owners Association of Nigeria said there was a need for the Federal Government to intervene to address the crisis.

Chief Chinedu Ukadike, National Public Relations Officer (PRO) at IPMAN,  explained that petrol price is being driven by the fluctuations in Forex, hence Nigerian consumers should expect a hike soon.

As regards whether oil marketers are considering an increase in petrol price, Chief Ukadike, was quoted to have declared “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.”

The Spokesman of IPMAN also stated: “Other manufacturers who import one thing or the other are also searching for dollars.

“So, the surge for Dollars has continued to increase. 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.”

According to him, oil marketers are still sourcing Dollars from the parallel market, as the CBN’s Importers and Exporters official window is illiquid.

Ukadike said: “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.”

The Nigerian National Petroleum Company Limited is still the major importer of petrol into Nigeria, though another importer, Emadeb, imported the commodity recently, said he.

Ukadike

“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.”

In connection with the marketers’ PMS projected price increase, he said restated that “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.”

On the apprehension of a possible hike in petrol price, Clement Isong, Executive Secretary of MOMAN, stated that this was inevitable if the dollar continued to rise against the naNairaira, 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.”

Oil marketers are importing Isong, Executive Secretary of MOMAN, said the dealers were not importing petrol despite the fact that the government recently issued licences to about six marketers to bring in products.

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