Oil marketers have said the cost of Premium Motor Spirit (PMS), commonly known as petrol, could soar to a range of N680 to N720 per litre in the upcoming weeks if the Nigerian naira continues to depreciate against the US dollar.
Industry insiders have listed the scarcity of foreign exchange as the key challenge, forcing dealers to postpone their plans to import PMS.
This situation has led to the suspension of petrol importation with even Emadeb, the sole marketer to recently import the commodity, struggling to recover its investment due to the naira’s depreciation.
Senior officials from major oil dealers, including the Major Oil Marketers Association of Nigeria, Independent Petroleum Marketers Association of Nigeria, and Petroleum Products Retail Outlets Owners Association of Nigeria, have collectively called for the Federal Government’s intervention to address this brewing crisis.
Chief Chinedu Ukadike, the National Public Relations Officer of IPMAN, emphasized that the price of petrol is now being driven by forex fluctuations.
“Once there is a slack in the naira against the dollar, there is going to be an effect. The demand and supply of forex is a key factor. We should also understand that it is not only petroleum products that use forex.
“Other manufacturers who import one thing or the other are also searching for dollars. So, the surge for dollars has continued to increase. So now that the dollar is hitting N910 to N940, and approaching N1,000, you should expect to buy PMS at the rate of N750/litre.
“It is simple mathematics, once the dollar is going up, have it in mind that the prices of petroleum products would definitely increase because the products are dollar-driven.”
The ongoing shortage of dollars in the Central Bank of Nigeria’s Importers and Exporters official window has left marketers sourcing dollars from the parallel market. This has exacerbated the situation, leading to a potential petrol price regime of N680 to N720 per litre if the exchange rate remains around N910 to N950 per dollar, according to Ukadike. If the dollar reaches N1,000, the price could hit N750 per litre.
The executive secretary of the Major Oil Marketers Association of Nigeria, Clement Isong, affirmed that despite recent licenses issued to several marketers, they are not importing petrol due to the scarcity of dollars.
Isong urged the government to address security concerns in the Niger Delta to increase crude oil output, thereby boosting dollar availability. He also echoed the need for intervention should petrol prices rise excessively, as hinted by the President.
The situation in the coming weeks will hinge on the exchange rate’s trajectory, and the government’s intervention may be crucial to stabilize the petrol market and prevent undue burdens on consumers.