- Illiquid CBN forex window unable to provide $25-30 million needed for PMS importation
- Petrol importation suspended as dealers struggle due to naira depreciation
Oil marketers have indicated that if the dollar continues to trade between N910 and N950 at the parallel market, the cost of Premium Motor Spirit, commonly known as petrol, could increase to a range of N680/litre to N720/litre in the upcoming weeks.
They mentioned that due to the scarcity of foreign exchange, dealers looking to import PMS are being compelled to postpone their plans. This warning follows the recent crossing of the N900/dollar mark by the local currency, with the naira being sold at over 945/dollar in the parallel market on Friday.
Oil dealers have revealed that the CBN Importers and Exporters official window for foreign exchange, which offers a lower exchange rate of around $740/litre, remains illiquid and is unable to provide the necessary $25 million to $30 million required for PMS importation by dealers. As a result, petrol importation by dealers, who were initially keen to import the commodity, has been suspended.
According to operators interviewed by The PUNCH, the only marketer, Emadeb, who recently imported the commodity, is now facing challenges in recovering its investment due to the depreciation of the naira. Senior officials from major oil dealers have stated that a hike in PMS price is likely unless the local currency strengthens in the coming weeks.
Leaders of various oil industry associations have emphasized the need for the Federal Government’s intervention to address this crisis. Chief Chinedu Ukadike, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, explained that petrol prices are now influenced by forex fluctuations, and Nigerians should be prepared for an impending price increase.
Asked whether oil marketers were considering an increase in petrol price, he replied, “Once there is a slack in the naira against the dollar, there is going to be an effect. The demand and supply of forex is a key factor. We should also understand that it is not only petroleum products that use forex.
“Other manufacturers who import one thing or the other are also searching for dollars. So, the surge for dollars has continued to increase. So now that the dollar is hitting N910 to N940, and approaching N1,000, you should expect to buy PMS at the rate of N750/litre.
“It is simple mathematics, once the dollar is going up, have it in mind that the prices of petroleum products would definitely increase because the products are dollar-driven.”
Ukadike stated that oil marketers were still sourcing dollars from the parallel market, as the CBN’s Importers and Exporters official window was illiquid.
“Nigerians should brace for a price regime of between N680 to N720 if the exchange rate stays around N910 to N950/$, but the price is going to hit N750 once the dollar rises to N1,000.
“This is because marketers still source dollars from the parallel market, and not only marketers but virtually all importers in Nigeria. There is no subsidy any more on petroleum products, so you expect the cost to fluctuate with the dollars,” he stated.
The IPMAN PRO also stated that the Nigerian National Petroleum Company Limited was still the major importer of petrol into Nigeria, though another importer, Emadeb, imported the commodity recently.
“NNPC is still the major importer for now. One other company, Emadeb, imported products recently, but because this product is being sold in naira, getting back their funds is another issue since the naira keeps depreciating, while PMS imports is in dollars.
“This is why it is often difficult to go back and buy again as an independent importer. That is the problem we are facing,” Ukadike stated.
On when Nigerians would start seeing the price increase, he said, “NNPC is like the sole distributor of petroleum products now, so once you see a change in the price of petrol at their outlets, then other marketers will implement it.”
The Executive Secretary, Major Oil Marketers Association of Nigeria, Clement Isong, alluded to the fact the dealers were not importing petrol despite the fact that the government recently issued licences to about six marketers to bring in products.
Asked to speak on the import of PMS by other marketers and whether they were sourcing forex from the I&E window or the parallel market, Isong replied, “The I&E window is illiquid. There’s no money there.