Oil marketers, on Thursday, insisted on a possible hike in the pump price of Premium Motor Spirit, popularly called petrol, following a further plunge in the value of the naira against the United States dollar.
The local currency weakened against the greenback at the black market from 900/dollar on Wednesday to 920/dollar on Thursday, raising further concerns about whether the pump price of petrol could be sold at the current price.
The naira which had hit 945/dollar at the parallel market about two weeks ago, rebounded last week.
However, the local currency began a move southward this week, a situation that has unsettled economic managers and stakeholders in the oil and gas sector.
Oil dealers and marketers told The PUNCH on Thursday that with the exchange rate at N920/$, the pump price of petrol could not remain at N617/litre, particularly if the current exchange rate lingered.
They again projected a cost of between N680/litre to N700/litre for PMS, based on an exchange rate of N920/litre, stressing that the forex rate was about N750/$ to N800/$ at the time the cost of petrol was pegged at N590/litre to N617/litre.
The oil marketers, however, pointed out that since the Federal Government had insisted that it would not increase the petrol price, it must then be “subsidising the commodity secretly, based on the prevalent exchange rate reality.”
Going by the projections and analysis of oil marketers and dealers, it, therefore, implies that the Federal Government might probably be spending about N90 as subsidy on petrol due to the crash of the local currency against the dollar.
It was gathered that the ex-depot price of petrol was around N585/litre on Thursday. The projected cost of N680/litre, going by the current forex rate, means that the government might be forced to spend about N95/litre as subsidy.
Last week, the Nigerian Midstream and Downstream Petroleum Regulatory Authority stated that petrol consumption in Nigeria was about 52 million litres daily.
When this is multiplied by the estimated N95/litre projected subsidy and calculated for a month, it implies that the government could be forced to spend about N153bn as fuel subsidy monthly.
The Special Adviser to the President on Media and Publicity, Ajuri Ngelale, had told State House correspondents last week that President Bola Tinubu had instructed that the cost of petrol should not increase.
“Mr President wishes to assure Nigerians following the announcement by the NNPC Limited just yesterday (Monday) that there will be no increase in the pump price of PMS anywhere in the country. We repeat, the President affirms that there will be no increase in the pump price of PMS,” he said
NNPCL had also last week, spoken up as regards the widespread concern of a possible hike in the pump price of petrol.
“Dear esteemed customers, we at NNPC Retail value your patronage, and we do not have the intention to increase our PMS pump prices as widely speculated. Please buy the best quality products at the most affordable prices at our NNPC Retail stations nationwide,” the company stated.
NNPC Retail is the downstream subsidiary of NNPCL that retails refined petroleum products for the group.
IPMAN warns
Recall that oil marketers had also indicated last week that the cost of petrol would rise to between N680/litre and N720/litre in the coming weeks should the spike in the exchange rate persist.
They again insisted, on Thursday, that since the fall in the naira exchange rate failed to abate the last few days, the cost of petrol would likely rise regardless of the positions of NNPCL and the Presidency, stressing that the only remedy was if the government had returned fuel subsidy quietly.
“I still maintain that since we are still importing petroleum products into this country, it has to do with forex. And once it has to do with forex, it means that so much naira will be chasing a few dollars.
“And since we don’t have the influx of dollars into Nigeria, the after effect is that the landing cost of petrol will continue to increase as long as the dollar continues to rise,” the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, stated.
@The PUNCH