Marketers Speak on Dollar Payment for Petrol Transactions as Sale of Cheap Fuel is Set to Commence
- Oil markets under the Major Energies Marketers Association of Nigeria have raised concerns on the complexities of the Forex affecting petrol transactions
- The association's executive secretary said that members have been prevented from importing fuel due to the unpredictability of the forex market
- The association, therefore, advocate for the use of gas as an alternate energy source due to the unconscionably high cost
Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.
The country's petroleum product supply chain and distribution may be confronted by more difficulty due to the current complexities of the foreign exchange market, according to the significant downstream marketers operating under the auspices of the Major Energies Marketers Association of Nigeria (MEMAN).
Source: UGC
The association's executive secretary, Clement Isong, gave a speech at a media forum held in Lagos on Thursday, Mar 7, 2024, according to Channels TV.
Members can no longer import
Isong claimed that members have been prevented from importing Premium Motor Spirit due to the intricacies and unpredictability of the foreign exchange market.
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According to him, assembling an accurate mathematical assessment of the product's landing cost makes it difficult to establish the proper pump price.
The Executive Secretary stated that their investment is not entirely safeguarded due to the dollarisation of some charges when outlining his members' positions on the current industrial value chain dilemma.
He said:
“The market and consumers are not immune to government policy that allows Nigeria Ports Authority, NPA, and the Nigerian Maritime Administration and Safety Agency, NIMASA, continuous charges in dollars, said Isong.
Additionally, he disclosed that even when marketers purchase goods from Nigerian National Petroleum Company Limited (NNPCL) Trading, ship-to-ship product unloading is conducted in US dollars, which raises the price at the pump.
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“We are presently concerned about sustainability, efficiencies, and affordability of energy for Nigerians, and we are encouraging the shift to energy transition specifically into gas space.”
Dollarisation undermining sector
Providing more context, Isong stated that even though the Federal Government has adhered to its stated intervention process since ending the fuel subsidy program, the dollarisation policy is undermining the sector and deterring investment.
He blamed the rate's unpredictable nature and the currency's fluctuating movement.
For example, he stated that marketers pay government agencies (NPA, NIMASA, etc.) roughly $10 per metric ton, which would result in a higher pump price given the present exchange rate.
In his analysis, he stated that when President Bola Tinubu removed the subsidy in 2023, the cost of a litre was approximately N4.85, and with the dollar at roughly N1,600 today, it has added up to about N11.83 a litre.
Similarly, for STS, which was $30 per metric ton at the time and was N14.54 today, with the dollar at approximately N1,600, that has pushed it up to N28.44, which is increasing the pump price.
Regarding transportation, Isong stated that carriers charge an average of N5–N8 per litre more, even in cases where marketers engage in separate talks.
He stated that the association continues to advocate for using gas as an alternate energy source due to the unconscionably high cost.
To break even and run effectively, Isong urged filing stations and depot managers to consider switching to compressed natural gas and other renewable energy sources, such as solar power.
Earlier, members of the Independent Petroleum Marketers Association of Nigeria (IPMAN) said they are already in talks with the Nigerian government to begin the sale of compressed natural gas in their filling stations nationwide.
IPMAN vice president Hammed Fashola said that marketers' filling stations would serve as CNG refilling centres to hurry up gas adoption in Nigeria.
Oil marketers speculate new petrol price
Legit.ng reported that the National Public Relations Officer of IPMAN, Ukadike Chinedu, has stated that the price of petrol might rise following the crash of the naira against the dollar.
The IPMAN spokesman said it is likely that Nigerians may see a hike in the price of the commodity as inflation and scarcity of Forex persist.
The IPMAN spokesman said it is likely that Nigerians may see a hike in the price of the commodity as inflation and scarcity of Forex persist.
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Source: Legit.ng
