Petroleum Product Marketers have requested for a review in the current price of fuel as the N145 per litre is no more feasible.
This according to them is because of the bad fall of the naira against the dollar which has apparently made it unprofitable for the marketers to import fuel at the normal N145.
The oil marketers noted that the scarcity of foreign exchange and the current rate of a dollar to a naira have made it impossible for them to import petrol into the country.
As seen on Punch Newspaper, according to the report by the Petroleum Products Pricing Regulatory Agency, the costs of the product and freight using an exchange rate of N280/$1 is at N122.03 and N140.40 per litre.
However, the current exchange rate to a dollar is as high as N420/$1. This according to the calculations brings the feasible pump price of fuel to about N167.15 per litre.
Using the exchange rate at the interbank market which is N314.20/$1 as of yesterday, the cost of fuel plus freight will be N125.12, which will be sold at N151.93 per litre.
An undisclosed official of the Oil Marketers Associations said that;
“Let the government do the needful. We have already said it before that the price is not sustainable. When they fixed that price, dollar was N280 – N285; now the dollar is almost N400 and they want us to bring in products and sell at N145. It is not possible.
“But right now, most of us are getting the product from the NNPC; that is why you still see that there is product everywhere. It is an indirect case of subsidy. It means the government is subsidising it through the NNPC and we are buying at local price. Had it been that we were the ones that sourced the foreign exchange, we can’t sell it at N145.”
According to the Ecobank Capital Head of Energy Research, Mr. Dolapo Oni, he stated that the initial calculation was based on when dollars was around N220 interbank rate and N315 at the parallel market.
However, the exchange rate has changed over the months and now the interbank rate is N315 and parallel market rate is about N420.
“Thus, a range of N275 to N295 was used to arrive at the template price range of N135 to N145.
“The official market is N310 this (Monday) morning while the parallel market is N422. This gives a range of between N151 and N200. I think they’ll probably adopt a range of N330 to N370 (per dollar) so we have a fuel price range of N160 to N170.
“The best solution, in my view, however, will be to take the last plunge and just remove cap on prices. It is probably the best in this market. Let competition regulate prices.”
Also, the officials of the Federal Ministry of Petroleum Resources and the PPPRA stated that it is not possible to buy forex at the rate of N350/$1 and still sell fuel at N145 per litre.
“There must be some form of subsidy somewhere, either from where they are getting the product or from the major importer of the PMS into Nigeria, because you cannot buy a dollar at N350 and still sell petrol at N145 if you want to remain in business,” a PPPRA official, said.
However, the Federal Government after a meeting at the Presidential Villa yesterday between the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru and President Muhammadu Buhari, said that there would be no increase in the price of petrol.
“There is nothing like increasing the price of petrol.” The NNPC Boss, Dr. Baru told journalists.
Kachikwu also noted that there is no plan for the Federal Government to review the increase in the price of petrol for now.