Petrol Price May Hit N800 Per Litre As Marketers Decry FX Imbalance

The Nigerian oil marketers have warned that the pump price of petrol may soon reach N800 per litre, a significant increase from the current range of N580 to N617 per litre.

They attributed this to the rising landing costs, the return of a regulated pricing regime, and the shortage of foreign exchange (FX).

The marketers made this disclosure at the Oil Trading and Logistics (OTL) Africa Downstream Expo held in Lagos recently.

They expressed their dissatisfaction with the unfair advantage that the Nigerian National Petroleum Company Limited (NNPC) has over them in accessing FX.

Mrs. Adenike Labanjo, the Chief Operating Officer of Pinnacle Oil and Gas Limited, moderated a panel session on “Africa Fuels Update -Overview of Trends and Market Development”.

She asked Mr. Adedapo Segun, the Executive Vice President (Downstream) of NNPC, how they could prevent the illegal export of petrol, given the widening gap between the NNPC costs and imports.

She said: “We saw a reduction in the consumption of petrol from about 65 million litres per day to 45 million litres per day after the subsidy announcement and implementation.

“Now, with the gap between the NNPC costs and imports, which could be close to N700 to N800, how do we ensure that the illegal export of petrol does not come back? Because the gap seems to be widening by the day with the various activities going on all over the world”.

She argued that the cost of sourcing petrol had become more unbearable to the marketers than the NNPC because of the FX imbalance. She said that the marketers faced challenges in importing petrol due to the volatility of FX or their inability to lock their cargoes at the right time.

She added: “There is a major imbalance in the FX. Now, NNPC has access to that and others don’t have. NNPC too is a business on its own, but clearly, there is a competitive edge that no one in the industry can compete with. That is very clear even from the very salient points that were made today.

“We talk about things around investments even in refineries or any other type of investment on infrastructure that can support the downstream business. With this imbalance in FX access, how can that promote investment to drive the business that we currently do, given the scenario that we see today”.

Dr Mohammed Salaudeen, the Executive Director of Northwest Petroleum and Gas Company Limited, also lamented that the high cost of sourcing petrol had led to the closure of 90 per cent of petrol depots nationwide.

He said that the cost of buying a 10,000-metric tonne of petrol locally from the NNPC and others had risen to N7 billion, more than double what it was last year.

He said that most of the marketers were unable to import petrol due to the FX challenge, even with the government approvals. He said that only less than 10 per cent of marketers were able to buy petrol locally while about five per cent were able to import at a huge loss.

He said: “If you look at the marketing plural of petroleum marketers both at MOMAN level, DAPPMAN level even at IPMAN level, how many members of these associations are functioning today? Go to Port Harcourt, Calabar, Lagos, 90 per cent of depots are shut down, not operating.

“To buy a 10,000 metric tonne of petrol locally and land the same in your terminal in Nigeria, you will need about N7 billion. Twice more than what you will need about the same time last year. So, you see what’s happening”.

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