Energy Crisis: Oil marketers desert depots over N720/litre petrol landing cost, Forex volatility

*Nigerian petroleum products marketers lament the current Foreign Exchange instability is making several oil dealers to shun product depots, warning the development may lead to widespread fuel scarcity in the country in months ahead

Isola Moses | ConsumerConnect

It is not yet a new dawn in the downstream sector of the petroleum industry in Nigeria as several petroleum depots are currently being deserted due to lack of products.

ConsumerConnect learnt the oil markers Thursday, October 5, 2023, disclosed the discomforting situation is caused by Foreign Exchange (Forex) rate volatility, as the landing cost of Premium Motor Spirit, otherwise known as petrol, has increased to N720/litre.

US Dollars vs. Nigerian Naira

Petroleum products dealers stated that filling stations were shutting down daily in large numbers because it was becoming increasingly difficult for their owners to run the energy business, according to report.

The marketers, however, said the development could lead to widespread fuel scarcity in the months ahead.

The landing cost of PMS into Nigeria had increased to N720/litre, up from N651/litre August 2023.

The Forex rate of the Central Bank of Nigeria (CBN) as of Wednesday was about N766/$1, whereas it hovered around N990/$ at the parallel market.

Speaking at the National Executive Council (NEC) meeting of the Natural Oil and Gas Suppliers Association of Nigeria (NOGASA) Thursday, in Abuja, Benneth Korie, National President of NOGASA, said several depots were currently dried up or out of stock.

Korie was quoted to have said: “Depot owners are so terribly affected by the increasing cost of crude oil and exchange rate, to the extent that many depots are practically deserted as their owners are unable to secure bank loans to fund their business due to high-interest rates.

“Banks are not willing to guarantee funds release to stakeholders as a result of the difficulty, instability and galloping rates of foreign exchange and high cost of the dollar.

“Many depots are presently dried up or out of stock, and this is no gainsaying as it is evidently verifiable.”

The NOGASA National President stated: “Worst hit are filling stations whose owners find it extremely difficult to secure funds to procure products for their retail outlets.

“Both the independent and major marketers are so terribly affected.

“As of today, filling stations are shutting down in great numbers on a daily basis and dealers are going out of business, with many more on the verge of bankruptcy because of their inability to secure funds to facilitate orders for their stations.”

Korie urged the Federal Government to urgently come to the aid of the downstream petroleum industry as quickly as possible.

He noted this is with a view to salvaging the industry from an impending colossal collapse, which would result in a more devastating blow to the economy at large.

‘Petrol landing cost is N720/litre’

Still checks revealed that the landing cost of petrol had risen to N720/litre from N651 August 2023.

Patrick Ilo, Chief Executive Officer (CEO) of PETROCAM Trading (Nigeria) Limited, said 52,000 metric tonnes of petrol imported by the company Tuesday was already N720/litre without fuel subsidies.

Ilo argued if the landing cost was already N720, the pump price should be around N729/litre in Lagos State, if the Federal Government had truly stopped subsidising the product in the Nigerian economy.

The CEO of PETROCAM Trading (Nigeria) Limited said: “This is the second time I am bringing in my vessel. But after bringing it in, I am trapped.

“I can’t sell it because I landed my own product at N720.

“And if you add transportation from depot to station, the value today should be N729/litre at the pump.”

He, nonetheless, blamed the price hike on high Foreign Exchange rate.

NNPCL still subsidising petrol, says PETROCAM Chief

Ilo reportedly affirmed that the Federal Government was still subsidising petrol through the Nigerian National Petroleum Company (NNPC) Limited.

”Yes, PETROCAM has an import licence, and we have products in Nigeria.

“I want to say this out loud that I brought (in product) 52,000 metric tonnes of PMS today (Thursday), which I borrowed about sixty-something million Dollars to import,” he said.

Ilo lamented, saying “but I cannot sell. Why? Because of the price NNPC is selling.

“NNPC to my mind; they are still subsidising. NNPC is quietly subsidising the market.

“And I don’t blame the government. It is when we have a stable government that there could be prosperity.”

He restated that “as of today, NNPC is subsidising these products. And I’m talking about a subsidy of more than N100/litre.

“Because if you need to sell today, I landed my own product at N720.

“So, how do you look at it? You look at it from the perspective of how much is diesel.”

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