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Price of Diesel Drops by Over 30% in Four Months

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Petrol - Investors King
  • Price of Diesel Drops by Over 30% in Four Months

Following the fluctuations in forex and international crude oil prices, the ex-depot price of diesel has dropped by over 30 per cent between February and June 2017.

As a deregulated product, the price of diesel is controlled by the market forces of demand and supply, unlike petrol, which has a price cap.

The international market price of crude above $53 in February, the prices of refined products were also high as the ex-depot price of diesel was between N225 per litre and N235.

The situation, it was gathered, was worsened by the high exchange rate at the period, which also impacted on the landing cost of products.

For instance, during the first week of February, the depots in Lagos were selling diesel above N235 per litre, while the pump price at filling stations were as high as N260 – N280 per litre.

While some were selling at N231, N230, 235, 227, 225, and N226, others were selling above N235 at the depots.

However, at the beginning of June, the depots were selling between N152 and N154 per litre.

According to market survey, the marketers were selling diesel at N152, 153 and N154, while the pump price was below N200 per litre at the beginning of June.

The price of diesel dropped further at the weekend with depots in Lagos selling at N155, 149, 147, 145, 144, and 144.50.

A marketer, who spoke on the situation, said the development was cyclic as a result of changing prices at the international and forex fluctuations.

“The price of crude and exchange rate in February were on the high side and they impacted not only on the price of diesel but all other products. Nigerians did not feel the impact on petrol because of the price cap. With the drop in price of crude below $50 per barrel, the country is not seeing the benefits of liberalisation on diesel,” he said.

Chairman of the Major Oil Marketers Association of Nigeria (MOMAN), Mr. Akin Akinfemiwa had told downstream operators in Lagos recently that the country was reaping the benefits of diesel and called on the federal government to remove the cap on the price of petrol.

“Without that, we will not realise the potential of this $5 billion revenue in the sector,” Akinfemiwa said.

The Chairman of Depots and Petroleum Products Marketers Association (DAPPMA), Mr. Dapo Abiodun, had also made similar call, saying that it was not by choice that the marketers allowed NNPC to currently import 95 per cent of petrol.

Abiodun, who is also the Chief Executive Officer of Heyden Petroleum Limited, said in addition to paying the marketers’ outstanding $2 billion claims arising from the old subsidy regime, the permanent solution was to remove the cap on the pump price of petrol and fully liberalise the downstream sector.

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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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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