Petrol Price May Hit N190
Amid concerns about the non-implementation of full deregulation of the downstream petroleum sector, there are speculations of the petrol price hitting N190.
Top officials from two major marketing associations who spoke to Punch said the continued rise in oil prices had brought back subsidies for petrol, as the price of pumps for petrol should be between N185 and N200 per litre to reflect the further rise in crude oil prices.
Mr Clement Isong, Executive Secretary/Chief Executive Officer of Nigeria’s Major Oil Marketers Association, who failed in many filling stations in Lagos to continually sell fuel at N160 and N165 per litre, said it meant that someone was bearing the cost of subsidies that the country could not afford at this time.
My association members are active in Nigeria and are concerned with the long-term sustainability of the industry as well as the country itself.
Petrol Price May Hit N190
So, we know that the pump price should be between N185 and N200 per litre, depending on what exchange rate you use.
“As long as we continue to sell the product at what we are currently selling, someone is bearing the cost of the subsidy, and at this moment, the country is really unable to afford the subsidy.”
Isong added that while demand for petrol had increased significantly in the country, there was a threat to the security of supply. He also noted that because of the significantly different prices across the borders that were recently opened, smuggling might have resumed.
“We need to restructure our entire supply chain completely, then. We need to reach a place where, in Nigeria, refining will resume if deregulation takes effect. We need to find a way of making sure that deregulation benefits Nigerians. That, I think, is what the discussion has to be about.
Although, despite the deregulation of the downstream petroleum sector, the Nigerian National Petroleum Corporation has been the sole importer of petrol into the country in recent years and is still relying on marketers for the supply of the product, private oil marketing companies have continued to regret that their inability to access foreign exchange at the official rates has hampered
Petrol Price May Hit N190
Mr. Mike Osatuyi, National Operation Controller, Independent Petroleum Marketers Association of Nigeria, who responded to the recent announcement by the federal government of the start of discussions with representatives of the labour movement on how to raise the freight rate from N7.51 per litre to N9.11 per litre, said that its implementation would lead to an increase in petrol prices as the increase in freight prices
We are already back to subsidies, and the Federal Government is subsidising about N1.8 billion per day from the information I have confirmed, because 70 million litres are now being pumped out every day because the borders have been opened; I don’t know where the fuel is going.
The government cannot afford a subsidy, and the budget does not have a subsidy. So, now the fundamentals of the market have to come into force.
“Our pump price should be about N186 to N190, based on $56 per barrel of crude oil. But now that the price of oil has gone to $59, the price of the pump should not be less than N200 per litre. There is no way Nigerians can avoid an increase in the price of petrol.
While there are concerns about whether the NNPC would again bear on behalf of the government the latest subsidy cost if the pump price of petrol is left unchanged in the face of the rise in oil prices, Dr. Kennie Obateru, Group General Manager, Group Public Affairs Division of the Corporation, said whatever would be done about the price of petrol pumps would be based on the advice from the Petroleum Products Pricing Reg
The point is that, for now, NNPC is the only one to import the product (petrol). We look forward to other marketers participating in the product importation, so that the burden will not just be on NNPC.
When asked if the NNPC had begun bearing the cost of subsidies, he said;
“I think it would be premature to say that it has to be based on the pricing of whatever PPPRA works out. The industry is already deregulated.”
He further averred that the government’s desire was to have a market that was fully deregulated.
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