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We Don’t Have Forex to Import Aviation Fuel — Marketers

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  • We Don’t Have Forex to Import Aviation Fuel

The scarcity of aviation fuel in Nigeria may be far from being over as oil marketers have said they do not have enough foreign exchange to import the product.

The Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore, in an exclusive interview with our correspondent, said, “As long as we don’t have forex, it becomes difficult for us to import. Give us forex and we will be able to bring more.”

He said the government could not bridge the supply gap for aviation or Jet A1 as done for petrol because of the shortage of forex.

“Government doesn’t have enough. If they give forex to petrol and to aviation fuel, it will affect other sectors. Now, it is even affecting the aviation sector. So, we are saying the government should try and manage it well so that we will have some forex to bring in aviation fuel.”

The MOMAN executive secretary said the arrangement with international oil companies for the provision of forex was for the importation of petrol.

This month, the CBN has asked banks to submit bids for a “special currency auction,” targeting fuel importers to meet demand for matured letters of credit.

The Executive Secretary, Depot and Petroleum Products Marketers Association, Mr. Olufemi Adewole, said the central bank was making effort to provide marketers with forex.

He, however, said the rate at which marketers were getting the funds was quite exorbitant and that was why the price of aviation fuel was high.

“If there is adequate provision of foreign exchange at a reasonable rate that can bring down the price of fuel, then the landing cost will also drop,” he said.

The marketers are also asking the Federal Government to pay them the foreign exchange differentials for the petrol imports they have made.

Olawore said said, “We will be glad if all our outstanding foreign exchange differentials and interests are all paid immediately.

“That will also help us to go to the market to look for forex.”

On May 11, the government announced a new petrol price band of N135 to N145 per litre, which signalled the end of fuel subsidy.

Prior to the increase from N87 per litre, the nation had suffered a prolonged and severe petrol scarcity as marketers complained that they could not access forex to import.

The new price band was based on an exchange rate of N285 against the dollar, reflecting the depreciation of the naira on the black market, where the currency was trading around 320 to the dollar.

The Central Bank of Nigeria on June 20 floated the naira as it abandoned its 16-month-old peg at 197 to the dollar, effectively devaluing the local currency.

In spite of the liberalisation of petroleum products and government intervention to ease marketers’ access to forex, the Nigerian National Petroleum Corporation remains the major importer of fuel, especially the Premium Motor Spirit, popularly known as petrol.

Olawore said when the naira moved from 197 to 285 to a dollar, there was a differential, adding, “When it moved from 285 to 305, there was a differential. Now we are forced to go to the black market, there is a differential.”

He said the price band of N135-145 for petrol covered up to N285/dollar.

“But who gets it at N285? Even the government could not sell to you at 285,” he said.

Fuel shortages often occur in the country during festive periods such as Christmas and Muslim holidays. But there has been no scarcity of petrol this Yuletide.

Commenting on this, Olawore said, “First, the NNPC has imported much. The second reason is that demand has fallen drastically. Demand has fallen nationwide; people that were filling their tanks are no longer doing so.

“So, every marketer is suffering from low demand and because of that the quantity in the market is enough for now.”

He attributed the decline in demand to the recent price hike, saying, “Not many people can afford it.”

On the forex differentials, Adewole said, “We concluded transactions on the PPPRA imports at the rate of N197/dollar. Naira was devalued and it became what it is today. We have Letters of Credit that have matured and that we have not liquidated.

“And because government paid us at the rate of N197/dollar, we are saying that whether the naira is devalued or not, that is the rate at which we must get dollars to liquidate those LCs because that was the basis of their calculation and payment to us.”

He said the payments for the transactions from December 30, 2014 to September 2015 were delayed.

“The government was supposed to pay within 45 days, but this was not done. The naira was devalued and the government has to bear the difference because we submitted our papers but it did not pay. If it had paid as and when due, we might have liquidated all the LCs because the naira component of the products, which we sold is with us in our banks.

“We only need that of the government to add to it and pay the suppliers. So, that foreign exposure to foreign banks through our local banks is still there and we are asking government to give us dollar at N197.

He said the delay in the payment of the outstanding forex differentials was hampering importation “because a lot of marketers’ funds are tied down.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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