22 May 2016, Abuja – Oil marketers have given an indication that the pump price of petrol will crash in the next one month.
Already, some filling stations belonging to independent marketers in major cities such as Abuja and Lagos are beginning to sell petrol below the N145 given last week by the Federal Government as the benchmark price per litre.
The Federal Government had penultimate Wednesday announced a new price regime of N145 as the maximum amount for a litre of petrol. This has prompted the Nigeria Labour Congress to declare a nationwide strike, demanding the return to the old prices of N86 and N86.50 per litre for fuel outlets controlled by the Nigerian National Petroleum Corporation and major/independent marketers, respectively.
The Executive Secretary, Major Oil Marketers Association of Nigeria, Mr. Obafemi Olawore; the President, Independent Petroleum Marketers Association of Nigeria, Chief Obasi Lawson, and an executive member, Reconciliation Committee of the Independent Marketers Association of Nigeria, Mr. Dibu Aderibigbe, in separate interviews, said the cost of petrol would fall in the near future as a result of the competition, which the new price policy had created.
Olawore said, “I just returned from Abuja and I discovered that there are two retail outlets around Jabi (in Abuja) that were selling at N137 per litre. This is because they needed to offload the stock and get more.
“So, when we get to the point where everybody has the product as we are doing now, those who want to quickly turn their tanks round will choose the price they want to sell. I am very confident that in spite of the unfavourable exchange rate, we will get to the point where prices will be moving up and down.”
Lawson also stated that the current partial deregulation policy of government would liberalise the oil and gas industry and engender competition that will warrant a reduction in price.
He said, “In less than one month, we will start reaping the benefits of the new policy. This new policy of the Federal Government that effected the change in price of the PMS is a welcome development and the PMS prices will start coming down very soon.”
Similarly, Aderigbigbe stated that the price of petrol would fall soon because independent marketers were gearing up to import the product in large volumes.
He said, “Independent marketers are going to import large volumes of petrol and any filling station that sells at high prices may lose customers. In fact, competition will be high and I can assure you that within the space on one month or two, the price of petrol will fall to the point that people will start making choices.”
The marketers have continued to laud the partial deregulation of the downstream industry, stressing that the initiative would not only liberalise the sector but also force down the pump price of petrol as a result of competition.
To make funding available for petrol importers, it was gathered that the Federal Government had to pair the upstream arm of the oil giant, Total E&P with its downstream company involved in the sale of the Premium Motor Spirit (petrol) at filling stations.
Specifically, some senior officials at the Federal Ministry of Petroleum Resources and the Nigerian National Petroleum Corporation told our correspondent that the government had paired Mobil upstream with its downstream firm.
They stated that other major marketers were also linked up with selected IOCs in order to access the United States dollars at reasonable rates.
“The pairing of upstream and downstream companies by the government is to ensure that the downstream businesses access forex at considerable rates, which are far better than what you get at the parallel market,” an official at the Petroleum ministry, who spoke on condition of anonymity said.
In one of the latest bulletins of the NNPC, which was made available to our correspondent by an official, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, stated that he had been able to get the buy-in of the upstream companies operating in Nigeria to support the growth of the downstream sector.
Kachikwu, in the bulletin, said, “This specifically is to enhance domestic supply of refined petroleum products by seeking the upstream companies to make available additional funding to support the importation of products being an innovative solution to address the current challenges in fuel supply and distribution.
“I have tied Total upstream to Total downstream; Mobil upstream to Mobil downstream; Agip Eni to Oando; and Shell to ConOil, to provide the needed funding.”
When asked if marketers had started getting forex from upstream oil companies, Olawore confirmed that the government had kept its words, stressing that some majors had benefitted from the initiative.
The Federal Government recently announced that marketers were permitted to source for forex from the secondary or parallel market in order to purchase petroleum products.
But marketers, some of who got their petrol import permits from the Petroleum Products Pricing Regulatory Agency last week, told our correspondent that the parallel forex market in Nigeria didn’t have enough United States dollars to meet the demand of the PMS importers.
It was learnt that some marketers were already making arrangements on how to access the greenback with forex dealers in countries such as Ghana and Liberia.
A senior official with one of the oil majors that got import permits last week stated that the pressure exerted on the parallel market by the PMS importers was a major factor that warranted the crash of the naira against the dollar.
Petrol importers had urged the government to intervene in the oil sector, particularly with respect to accessing forex, as they noted that the over N360 to a dollar rate at the parallel market was unhealthy for the business.
Aderibigbe said despite the government’s directive that marketers should source for forex, it was still important for the government to support oil dealers.
He lauded the pairing of upstream with downstream companies by the government, but stressed that many independent marketers still had to contend with the challenges of accessing forex.
Aderigbigbe said, “If you use N365 as the exchange rate to buy a dollar-denominated product, won’t the price of that product increase? That is the problem we have and which government must do something about. You cannot just say that people should go to the parallel market to source for dollar.