Shortage of Dollars: Oil Marketers Warn of Potential Fuel Price Hike to N720 per Litre - The Top Society

Shortage of Dollars: Oil Marketers Warn of Potential Fuel Price Hike to N720 per Litre


BY – Blessing Jonathan


Traders in the oil markets have announced that petrol price would likely be increased from current N680/litre to N720/litre in days to come, should the Dollar exchange rate continue to increase.

This was contained in a report from oil dealers on Sunday, August 13, while lamenting that the government should do something about the impending surge in the dollar exchange rate, nearing a staggering N950 per dollar.

The oil traders also lamented that they are being forced to go on strike as a result of the dollar scarcity in the forex market.

As at Friday, August 11th, the Naira was being traded at a distressing rate of over 945 per dollar in the parallel market. Simultaneously, the I&E window, which is supposed to have a rate of N745, unfortunately had no currency available for sale.

According to reports, the Central Bank of Nigeria (CBN) has indicated its inability to supply the necessary $25 million to $30 million needed for fuel importation by dealers. Consequently, importers are now compelled to put their operations on hold temporarily.

CEO of Emadeb Energy, Adebowale Olujimi, also lamented of not being able to continue importation after the first one it did not long ago because of the naira crunch.

Recall that Emadeb Energy recently imported 27m liters of petrol, thereby ending NNPC monopoly.

An interview with the officials of major oil dealing associations, which includes; Independent Petroleum Marketers Association of Nigeria (IPMAN) and Petroleum Products Retail Outlets and Owners Association of Nigeria (PETROAN), called on the Federal Government to intervene and address the crisis, once and for all.

Particularly, Suleiman Yakubu, National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, thoroughly explained the undeniable link between forex and fuel price control, as long as  PMS is being imported into the country.

“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.”

“Nigerians should brace up 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 PRO of IPMAN also highlighted that the Nigerian National Petroleum Company Limited remains the primary importer of petrol into Nigeria, while another entity, Emadeb, has recently undertaken imports of the same commodity.

“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,” Yakubu stated.

“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,” Yakubu said.

Clement Isong, the Executive Secretary of the Major Oil Marketers Association of Nigeria (MOMAN), emphasized that the Nigeria National Petroleum Commission Limited (NNPCL) retains its exclusive role as the main distributor of petrol, even though the Nigerian government has granted licenses to six private energy companies, including Emadeb. This is because the private firms are handicapped with the ridiculous dollar exchange rate that keeps inflating.

He emphatically stated that the I&E window is experiencing a lack of liquidity and currently holds no funds for distribution.<span;>The official therefore called on the the president to intervene quickly as promised.

<“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.”

“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 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.

President of Petroleum Products Retail Outlets and Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, also aired his opinion that Dollar exchange rate and petroleum price are inseparable.

“So long as the naira is losing against the dollar, the price of petrol in our retail outlets will continue to increase. To address this, he called on Tinubu to make sure that Nigeria’s refineries were put back to use.

“We have requested that the President should declare a state of emergency on our refineries in order to speed up their repairs.

“That is the one sure way to go, in order to be able to predict the price of petroleum products, because for now, every PMS you buy in any retail outlet is dollarised,” Gillis-Harry stated.

Conversely, the Central Bank of Nigeria (CBN) maintains that the ongoing depreciation of the Naira is a consequence of diverting Diaspora remittances towards the parallel market.

According to the CBN Acting Governor, Folashodun Shonubi, a lot of Diaspora remittances arrived in Nigeria in dollars and end up in the parallel market without being officially documented.

Nevertheless, Nigeria’s President, Bola Tinubu, has not yet formally and comprehensively communicated with the public regarding the outlined strategy to resolve the foreign exchange crisis.

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