The naira’s continuous depreciation against the dollar has put pressure on the importation of petrol in Nigeria, as oil marketers warn of an imminent price hike.
According to them, the cost of Premium Motor Spirit, popularly called petrol, could rise to between N680/litre and N720/litre in the coming weeks if the dollar continues to trade from N910 to N950 at the parallel market.
They also said that some dealers who were willing to import petrol had suspended their plans due to the scarcity of foreign exchange.
The naira has been on a downward spiral in recent months, crossing the N900/dollar mark last week and hitting over N945/dollar on Friday.
This has made it difficult for oil marketers to access forex at the Central Bank of Nigeria’s Importers and Exporters official window, which offers a lower exchange rate of about N740/dollar.
However, this window has been illiquid and unable to provide the $25m to $30m required for the importation of petrol by dealers.
The only marketer, Emadeb, who imported petrol recently, is now facing challenges in recouping its investment due to the naira’s fall. Other major oil dealers, such as the Major Oil Marketers Association of Nigeria, the Independent Petroleum Marketers Association of Nigeria, and the Petroleum Products Retail Outlets Owners Association of Nigeria, have called for the government’s intervention to address the crisis.
The National Public Relations Officer of IPMAN, Chief Chinedu Ukadike, explained that the price of petrol was now driven by the fluctuations in forex, hence Nigerians should brace for a hike soon. He said that once the dollar reaches N1,000, Nigerians should expect to buy petrol at 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,” he said.
He added that oil marketers were still sourcing dollars from the parallel market, which was more expensive than the official window. He also stated that the Nigerian National Petroleum Corporation 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,” he stated.
He said that Nigerians would start seeing the price increase as soon as the dollar hits N1,000 or above. He advised Nigerians to conserve fuel and use alternative sources of energy where possible.
“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,” he said.
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