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Nigerian Marketers Warn of Potential Petrol Price Hike to N800 per Litre
Marketers in Nigeria have sounded the alarm over a possible surge in the price of petrol, which could see it rise to a range of N700 to N800 per litre, up from the current range of N580 to N617 per litre. The concerns were raised at the Oil Trading and Logistics (OTL) Africa Downstream Expo in Lagos, where industry leaders discussed the challenges they face in the petroleum sector, including regulated pricing, soaring landing costs, and difficulties in accessing foreign exchange.
Challenges Faced by Marketers:
- Widening Gap between NNPC Costs and Import Costs: Mrs. Adenike Labanjo, the COO of Pinnacle Oil and Gas Limited, highlighted the growing gap between the Nigerian National Petroleum Company Limited (NNPC) costs and import costs. This disparity has raised concerns about illegal petrol exports, as private marketers find it increasingly difficult to compete.
- Unequal Access to Foreign Exchange: Labanjo also emphasized the unequal access to foreign exchange, with the NNPC enjoying preferential treatment. Private marketers struggle to import petrol due to this discrepancy, which, in turn, hampers investments in infrastructure needed to support the downstream business.
- High Cost of Sourcing Petrol: Dr. Mohammed Salaudeen, the Executive Director of Northwest Petroleum and Gas Company Limited, expressed his concerns about the high cost of sourcing petrol. This has resulted in the closure of 90% of petrol depots across the nation. The cost of purchasing locally from the NNPC and other sources has significantly increased.
Rising Landing and Diesel Prices: Jude Nwaulune, the Managing Director of Rainoil Logistics, shed light on the cost of landing petrol in Lagos, which now stands at around N560 to N565 per litre. The soaring diesel prices, currently hovering at approximately N1000 per litre, further contribute to the challenges in maintaining affordable pump prices for consumers.
Response from NNPC: In response to concerns about the FX imbalance and the competitive advantage enjoyed by NNPC, Mr. Segun, the Executive Vice President of Downstream at NNPC Limited, clarified that NNPC operates as a competitor, not a regulator. He encouraged other marketers to embrace the competition posed by NNPC, as the corporation competes with other industry players.
The warning from Nigerian marketers about a potential petrol price increase to N800 per litre highlights the challenges and uncertainties in the petroleum sector. Factors such as the widening gap between NNPC and import costs, unequal access to foreign exchange, high sourcing costs, and soaring diesel prices contribute to this concern. As discussions continue within the industry, finding a balanced solution that ensures both sustainability and affordability for consumers remains a top priority.