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Naira crumbles to 920/$, fuel marketers push for fresh price hike

The local currency weakened against the greenback at the black market from 900/dollar on Wednesday to 920/dollar on Thursday, raising further concerns about whether the pump price of petrol could be sold at the current price.

Okechukwu Nnodim, Oluwakemi Abimbola,Deborah Tolu-Kolawoleand Gbenga Oloniniran


Oil marketers, on Thursday, insisted on a possible hike in the pump price of Premium Motor Spirit, popularly called petrol, following a further plunge in the value of the naira against the United States dollar.

The local currency weakened against the greenback at the black market from 900/dollar on Wednesday to 920/dollar on Thursday, raising further concerns about whether the pump price of petrol could be sold at the current price.

The naira which had hit 945/dollar at the parallel market about two weeks ago, rebounded last week.

However, the local currency began a move southward this week, a situation that has unsettled economic managers and stakeholders in the oil and gas sector.

Oil dealers and marketers told The PUNCH on Thursday that with the exchange rate at N920/$, the pump price of petrol could not remain at N617/litre, particularly if the current exchange rate lingered.

They again projected a cost of between N680/litre to N700/litre for PMS, based on an exchange rate of N920/litre, stressing that the forex rate was about N750/$ to N800/$ at the time the cost of petrol was pegged at N590/litre to N617/litre.

The oil marketers, however, pointed out that since the Federal Government had insisted that it would not increase the petrol price, it must then be “subsidising the commodity secretly, based on the prevalent exchange rate reality.”

Going by the projections and analysis of oil marketers and dealers, it, therefore, implies that the Federal Government might probably be spending about N90 as subsidy on petrol due to the crash of the local currency against the dollar.

It was gathered that the ex-depot price of petrol was around N585/litre on Thursday. The projected cost of N680/litre, going by the current forex rate, means that the government might be forced to spend about N95/litre as subsidy.

Last week, the Nigerian Midstream and Downstream Petroleum Regulatory Authority stated that petrol consumption in Nigeria was about 52 million litres daily.

When this is multiplied by the estimated N95/litre projected subsidy and calculated for a month, it implies that the government could be forced to spend about N153bn as fuel subsidy monthly.

The Special Adviser to the President on Media and Publicity, Ajuri Ngelale, had told State House correspondents last week that President Bola Tinubu had instructed that the cost of petrol should not increase.

“Mr President wishes to assure Nigerians following the announcement by the NNPC Limited just yesterday (Monday) that there will be no increase in the pump price of PMS anywhere in the country. We repeat, the President affirms that there will be no increase in the pump price of PMS,” he said

NNPCL had also last week, spoken up as regards the widespread concern of a possible hike in the pump price of petrol.

“Dear esteemed customers, we at NNPC Retail value your patronage, and we do not have the intention to increase our PMS pump prices as widely speculated. Please buy the best quality products at the most affordable prices at our NNPC Retail stations nationwide,” the company stated.

NNPC Retail is the downstream subsidiary of NNPCL that retails refined petroleum products for the group.

IPMAN warns

Recall that oil marketers had also indicated last week that the cost of petrol would rise to between N680/litre and N720/litre in the coming weeks should the spike in the exchange rate persist.

They again insisted, on Thursday, that since the fall in the naira exchange rate failed to abate the last few days, the cost of petrol would likely rise regardless of the positions of NNPCL and the Presidency, stressing that the only remedy was if the government had returned fuel subsidy quietly.

“I still maintain that since we are still importing petroleum products into this country, it has to do with forex. And once it has to do with forex, it means that so much naira will be chasing a few dollars.

“And since we don’t have the influx of dollars into Nigeria, the after effect is that the landing cost of petrol will continue to increase as long as the dollar continues to rise,” the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, stated.

He added, “The rise in dollar automatically leads to an increase in the cost of petroleum products, except the NNPCL is subsidising it through the Federal Government. I also recall the last statement by the Special Adviser to the President on Media, who said he got a brief from the president that the fuel price would not rise.

“That automatically means that there is quasi-deregulation and that Mr President is cushioning the price of petroleum products in relation to the dollar. So if the dollar is higher at the parallel market, it means that whatever is the offshoot, the Federal Government will continue to keep petrol prices within a price regime.

“And that regime currently is from N590/litre to N620/litre depending on the part of Nigeria you are buying it from. But if you allow the commodity to sell at the free market price, with respect to the hike in dollar currently, the cost of petrol should be around N680/litre and N700/litre.”

Also speaking on the issue, the Secretary, IPMAN, Abuja-Suleja, Mohammed Shuaibu, noted that the petroleum products market today is largely determined by forex.

“Of course, there was panic when the dollar was almost hitting N1,000, which is why the government is supposed to act quickly to avoid a crisis. They (the government) debunked projections of fuel price hikes.

“But the truth is that as it is now, no indigenous marketer is going to bring in this product any longer because of the rate of the dollar. The petrol being consumed now is from the reserve, but we don’t know what the government’s plan is. I don’t know if there is any ship that is bringing in products now.

Marketers shun importation

“However, what I know is that no marketer wants to go and import petrol again. Everyone is careful right now. That is why people are saying that the government is going to bring back fuel subsidy, particularly with what happened in Kenya recently,” Shuaibu stated.

He pointed out that “when nobody wants to import, automatically the government has to do something internally or secretly because it had already come out to tell the public that it would not go back to fuel subsidy and would not increase the pump price of petrol. So which magic is it going to do?”

Earlier, the President, of Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, explained that in practical terms one would say subsidy on petrol had returned.

Gillis-Harry said, “We heard the President’s firm commitment to keeping deregulation on stream and also to ensure the sustenance of subsidy removal. One would say there is subsidy, going by the rising forex and crude oil prices, but since the President said no return of subsidy, let’s take it that way.”

Punch Newspapers

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