Forex Crisis: Marketers Propose N720/litre, Suspend Fuel Imports
Oil marketers, on Sunday, indicated that the cost of Premium Motor Spirit, popularly called petrol, would rise to between N680/litre and N720/litre in the coming weeks should the dollar continue to trade from N910 to N950 at the parallel market.
They also hinted that dealers seeking to import PMS were being forced to put the plans on hold due to the scarcity of foreign exchange to import the commodity.
The warning came barely one week after the local currency crossed the N900/dollar ceiling, with the naira selling at over 945/dollar at the parallel market on Friday.
Oil dealers said the CBN Importers and Exporters official window for foreign exchange, which boast of a lower exchange rate of about $740/litre, had remained illiquid and unable to provide the $25m to $30m required for the importation of PMS by dealers.
This, they said, had led to the suspension petrol importation by dealers who were initially eager to import the commodity.
Operators said that the only marketer, Emadeb, who imported the commodity recently, was now finding it tough to recoup its investment due to the depreciation of the naira.
Senior officials of major oil dealers, said in separate interviews on Sunday, that PMS price hike was imminent unless the local currency appreciates in the coming weeks.
Leaders of the Major Oil Marketers Association of Nigeria of Nigeria, Independent Petroleum Marketers Association of Nigeria, and Petroleum Products Retail Outlets Owners Association of Nigeria said there was a need for the Federal Government to intervene to address the crisis.
The National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, explained that the price of petrol was now driven by the fluctuations in forex, hence Nigerians should expect a hike soon.
Asked whether oil marketers were considering an increase in petrol price, he replied, “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.
The CBN Acting Governor, Folashodun Shonubi, spoke while delivering a lecture titled ‘Diaspora Remittances and Nigeria Economic Development’ at the National Institute for Security Studies in Abuja.
Shonubi said a lot of Diaspora remittances arrived in Nigeria in dollars and end up in the parallel market without being officially documented.
It is still unclear at what point President Bola Tinubu administration plan to intervene in the market to arrest the unfolding crisis.
