Dollar Scarcity: Petrol Price Hike Looms, Marketers Say


Nigerians should be prepared for
another increase in the pump
prices of petrol, due to the
continued scarcity of foreign
exchange to finance the
importation of the product, oil marketers have said.
According to them, the United
States dollar hit an all-time high
last week, as it exchanged for
N400 at the parallel market.
Worried by the development, the marketers say if not urgently
addressed, the pump prices of
petrol will not remain at the
approved rates.
The Federal Government
liberalised the downstream sector of the petroleum industry
on May 11, 2016, and
announced an increase in the
pump prices of petrol from N86
and N86.5 per litre to between
N135 and N145 per litre. It also stated that the market
was to be driven by the factors
of demand and supply, as it was
now largely in the hands of
private sector players.
But oil marketers told our correspondent on Monday that
despite the competition in the
business, they were struggling
to retain the price of the
Premium Motor Spirit within the
approved range. “The truth is that Nigerians just
have to brace for higher PMS
price; there are no two ways
about it. The government cannot
fund this market; the money is
not just there. Even if the government wishes to assist, it
does not have the wherewithal
to do. So, Nigerians should brace
for higher rates,” an official of
one of the notable oil marketing
companies, who spoke to our correspondent on condition of
anonymity, said.
He added, “We are all aware that
the price of crude has been
falling in the international
market and it is the dollar the government gets from crude
sale that it uses to solve forex
problems. So, there’s no fast rule
or solution to it than for all of us,
both users and marketers, to just
prepare for a price hike. “For marketers, they should
know that the days of higher
profits are gone. Before now, if
you want to import petrol, you’ll
have to wait for months and
possibly bribe some people to get an import licence. But those
days are gone; nowadays, every
interested dealer can get the
licence and this has created
room for competition, which is
why you still get the product at around N140 to N145 per litre.
We only hope that this will
continue as the dollar availability
A member of the Major Oil
Marketers Association of Nigeria stated that the ex-depot price of
the PMS had remained at
N133.28 per litre because the
marketers were doing their best
to manage the situation.
The marketer, who also pleaded to remain anonymous because
of the sensitive nature of the
subject, said the PMS dealers
hardly got forex at the rate that
the government initially
promised them. He said, “It is very logical for the
PMS price to rise any moment
from now, for there is no way
somebody can import at the rate
of N400 to a dollar and you
expect him to continue selling at the official ex-depot price. And
mind you, the government
promised to facilitate forex
provision to marketers at N287
to a dollar, because you cannot
buy at N400 and expect to continue selling at the prevalent
rates you see at filling stations
“However, most depots are still
managing the situation and are
selling at the recommended price of N133.28 per litre to
filling stations. It is when it goes
above this price that you will
notice the eventual increase in
the pump prices of the PMS. So, if
the trend of forex unavailability continues, then the situation
may go out of the control of the
On whether oil dealers have a
peculiar channel for sourcing
forex outside the official and parallel markets, the source said,
“There’s no other way for
sourcing it. Although outside the
parallel market, there is still an
autonomous market where you
may get the dollar at rates that are less than what you get from
the parallel.
“There are usually two prices at
the market and marketers look
at the one with the lower price,
which is mostly the government regulated rate. However, the
difference between the two
prices is marginal most times.”
A senior official of the
Independent Petroleum
Marketers Association of Nigeria, Mr. Dibu Aderigbigbe, had earlier
told our correspondent that the
forex crisis might lead to a
further hike in petrol price if it
“The dollar is the major legal tender used for the importation
of petroleum products; so, any
crisis in forex will definitely affect
the prices of these commodities
in the long run. However, we
hope the situation is addressed in earnest,” he said.
The Minister of State for
Petroleum Resources, Dr. Ibe
Kachikwu, recently made it clear
that the government had
liberalised the downstream oil sector, stressing that the refined
products and their prices were in
the hands of private sector
When contacted, the
spokesperson for the CBN, Mr. Isaac Okoroafor, said since the
flexible foreign exchange rate
regime commenced, the apex
bank made it clear that all
transactions would be based on
the prevalent forex market rate. He said, “As soon as we
introduced the new flexible
foreign exchange market, it was
made clear to everybody that all
transactions must go through
that market. The only concession we made was that, yes, we
agreed that the IOCs will sell
dollars to petrol importers, but it
must be at the prevailing rate of
the market on the day of the
transaction. “What we have done for
transactions concerning oil
importation is that the IOCs are
allowed to sell their foreign
exchange to petrol importers,
because oil is a very important commodity to the nation. But the
IOCs must sell at the ruling
exchange rate from the market
for that day and this means the
prevalent rate for the day.
“For instance, today, the market closed at N311 to a dollar, which
means if they (IOCs) are selling,
they have to sell to the
marketers at that rate. The CBN
never promised anybody a
lower rate; it is the market that determines the rate.”
However, the spokesperson for
the Nigerian National Petroleum
Corporation, Mr. Garba-Deen
Mohammed, did not answer calls
made to his mobile telephone number.
He also did not respond to a text
message sent to his telephone
on the matter as of the time of
filing this report around 9.20pm.
But the General Secretary, Nigeria Labour Congress, Peter
Ozo-Eson, said the removal of
the fuel subsidy in an import-
driven regime for petroleum
products was the beginning of
crisis. Ozo-Eson said the NLC had
warned Nigerians during the last
protest it organised against the
increase in the pump price that
the subsidy removal would
result in an uncontrollable increase in the price of the
He stated that a look at the
current prices of diesel and
kerosene showed that the
government was only managing the current pump price of petrol
to prevent people from losing
faith in the decision to remove
subsidy on the product without
first ensuring local refining.
The labour leader argued that with an exchange rate of N400
to the dollar, the pricing template
would be higher than the
recommended pump price,
which would result in a crisis.
Ozo-Eson stated, “If you recall what led to our strike and
protest the other time, then we
said that it was the beginning of
a crisis to do what they had
done under an import regime for
petroleum products and that it would lead to a spiral that we
would have no control over.
And so, I do not see how the
price of the PMS will remain at
N145 or thereabout with the
pressure on the naira, and we predicted that.
“As a matter of fact, when you
look at what is happening to the
prices of diesel and kerosene
today, then you will realise that
for now, they are just managing and holding on to the price of
the PMS in order for people not
to lose faith in what they have
“But with time, we are going to
face the reality that if the naira is 400 or more to the dollar, and
you now go down through the
template, you are going to find
that the recommended pump
price will be much higher and
there will be a crisis.” He said that the government had
the option to either allow the
market to collapse or bring in
some form of support to address
the situation.
According to him, it is up to Nigerians to either endure it or
mount pressure on the
government to take steps to
protect them.