Farouq Ahmed
Marketers push for hike in petrol price. Marketers are demanding that market indications determine the price movement of Premium Motor Spirit, also known as gasoline, even though doing so could result in a price increase of up to N700. Following President Bola Tinubu’s statement that the product would no longer get a subsidy, gasoline prices rose by 165% to N500, according to OPEOLUWANI AKINTAYO.
The country’s current gas prices, according to oil marketers, do not accurately reflect the market. Less than two months after the price of gasoline was increased from N189 per litre to N500, they were predicting another price review this month.
Their request was fulfilled when, on Tuesday, some gas stations run by the Nigerian National Petroleum Company Limited increased the price of gasoline at the pump from N537 per liter to N617 per liter nationwide.
Tunji Oyebanji, a former CEO of 11 Plc and Chairman of the Major Oil Marketers Association of Nigeria, told The PUNCH in a chat that oil prices would reflect the state of the market at the time.
He claims that this is what is available in neighboring African nations that import gasoline.
“There is still a risk if pricing in other nations represent genuine market prices but not our own. We won’t know the precise scenario until we all import at the new exchange rate, know the price, and compare it with our neighbors. The difference probably won’t be that great, according to Oyebanji.
According to research by The PUNCH, while PMS costs about N617 per litre in Nigeria, it costs about N1,169 in Mali, N986 in the Ivory Coast, N986 in Cameroon, N948 in Ghana, N945 in Togo, and N877 in Benin.
Mike Osatuyi, the national controller of operations, recently informed a reporter that starting in July, the price of gasoline may rise to N600/N700 and above.
“Depending on the currency rate, the current crude price at the international market, and landing costs, what I am seeing is approximately N600 and above. Those in Lagos will pay around N600, those outside Lagos around N600 plus, while those in the north would be paying anything from N700 and above,” he said.
Oyebanji stated that since competition would promote fair play, it was good for the downstream industry.
“The simple line is that there will be a price change. Yes, it might rise right now. In accordance with the exchange rate, it can potentially decline. But the good thing is that products would be everywhere, and if you see that yours is more expensive than those of the filling stations around you, you will be forced to bring down prices so that customers can come and buy. There would be healthy competition, which is good for the market,” he continued.
For Osatuyi, the current price of petrol is a “transitional price”. He hinted that marketers were expecting a roadmap from the Federal Government following subsidy removal.
After the discussion with labor, we anticipate a roadmap from the federal government. According to Labour, they will give the administration two months to develop the strategy. Additionally, we anticipate the roadmap for expanding the use of compressed natural gas.
“Three marketers have already indicated that they will begin importing products in July. We would then be aware of the true cost of goods because it would undoubtedly rise at that point. This current price is really a temporary price, he said.
Oyebanji also warned of the return of smuggling if market forces are not allowed to control the market.
“Would we not see tankers being diverted again to our neighbours? The price differential between us and our neighbours, apart from greed, what else could account for this level of disparity in these June figures?” he wondered.
Oyebanji also declared that depot owners were resorting to both local and foreign loans to finance importation.
We don’t merely obtain importing licenses, after all. Even though we have a license, we no longer import because it is no longer profitable. Everyone is currently attempting to determine what we can accomplish. Some people gather funds and take out loans from abroad, while others use local banks. There would be more than three firms importing. Several businesses are currently rushing to begin bringing in merchandise. But we won’t be shouting about it on the pages of newspapers,” he said.
Also, a source at a depot in Lagos, who does not want his name in print, hinted that more importers were currently being licensed.
He further stated that if complete deregulation was not permitted to take place, there would still be goods smuggling or diversion to neighboring nations.
“From whence do nations like Ghana, Benin, and Cameroon obtain their goods? He questioned, “Is it not from Nigeria?
“Market fundamentals will influence product prices. And right now, the 7.5% VAT is causing Customs to detain several AGO (diesel) vessels. Any expenses marketers incur are first added to the pump price, then to the landing cost. Because they must turn a profit, the marketers would also need to include profit, he added.
Akin Akinrinade, the chairman of IPMAN Satellite Depot, told The PUNCH that marketers were still loading goods at the N496 per litre price set by the government.
“There are currently products in the country and we are loading at a government price of N496.50 per litre. But because of the new forex policy of the central bank, naira has shot up to around N765/ $1. Until new products start coming in, we won’t know the exact extent to which the new policy would affect our business,” he said.
“Market fundamentals will influence product prices. And right now, the 7.5% VAT is causing Customs to detain several AGO (diesel) vessels. Any expenses marketers incur are first added to the pump price, then to the landing cost. Because they must turn a profit, the marketers would also need to include profit, he added.
Akin Akinrinade, the chairman of IPMAN Satellite Depot, told The PUNCH that marketers were still loading goods at the N496 per litre price set by the government.