Oil marketers warned on Sunday that if the dollar kept fluctuating between N910 and N950 on the black market, the price of Premium Motor Spirit, often known as petrol, would jump to between N680 and N720 per liter in the coming weeks.
They also made hints that importers of PMS were having to postpone their plans owing to a lack of available foreign currency.
The naira was trading at over 945 to the dollar on Friday on the parallel market, less than a week after it broke through the N900/dollar limit, when the warning was issued.
Oil traders said that the CBN Importers and Exporters official window for foreign exchange, which boasts of a cheaper exchange rate of approximately $740/litre, had remained illiquid and was unable to offer the $25 million to $30 million needed for dealers to import PMS.
This, they said, had led to the suspension petrol importation by dealers who were initially eager to import the commodity.
The Federal Government must step in to handle the situation, according to the leaders of the Major Oil Marketers Association of Nigeria, Independent Petroleum Marketers Association of Nigeria, and Petroleum Products Retail Outlets Owners Association of Nigeria.
According to Chief Chinedu Ukadike, the National Public Relations Officer for the Independent Petroleum Marketers Association of Nigeria, the price of gasoline is now determined by changes in foreign exchange, therefore Nigerians should prepare for a rise shortly.
Asked whether oil marketers were considering an increase in petrol price, he replied, “Once there is a slack in the naira against the dollar, there is going to be an effect. The demand and supply of forex is a key factor. We should also understand that it is not only petroleum products that use forex.
“Other manufacturers who import one thing or the other are also searching for dollars. So, the surge for dollars has continued to increase. So now that the dollar is hitting N910 to N940, and approaching N1,000, you should expect to buy PMS at the rate of N750/litre.
“It is simple mathematics, once the dollar is going up, have it in mind that the prices of petroleum products would definitely increase because the products are dollar-driven.”
Ukadike stated that oil marketers were still sourcing dollars from the parallel market, as the CBN’s Importers and Exporters official window was illiquid.
“Nigerians should brace for a price regime of between N680 to N720 if the exchange rate stays around N910 to N950/$, 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.”