Nigerians have been cautioned to prepare for an impending shift in the pricing structure of Premium Motor Spirit (PMS), commonly known as petrol, in the coming weeks.
This anticipated change is a result of the ongoing foreign exchange crisis that has significantly affected the value of the Nigerian naira.
As of Friday, the naira was trading at over 945 to a US dollar in the parallel market, exacerbating concerns over fuel pricing.
Oil marketers have revealed that if the current trend continues, the cost of petrol could surge to a range between N680 and N720 per litre.
This projection takes into account the fluctuating exchange rates, particularly within the range of N910 to N950 for a dollar on the parallel market.
The uncertainty stems from the scarcity of foreign exchange in the Central Bank of Nigeria’s Importers and Exporters’ official window, which offers a lower exchange rate of approximately $740 per litre.
This lack of liquidity in the official window is impeding the availability of the $25 million to $30 million needed for petrol importation by dealers.
The prevailing situation has prompted several dealers, initially enthusiastic about importing petrol, to halt their efforts due to the depreciation of the naira.
Notably, Emadeb, a major importer, has faced challenges recouping its investments due to currency devaluation.
Representatives from prominent oil marketers’ associations, including the Major Oil Marketers Association of Nigeria, Independent Petroleum Marketers Association of Nigeria, and Petroleum Products Retail Outlets Owners Association of Nigeria, have collectively called on the federal government to address the forex crisis.
They assert that unless the local currency appreciates, petrol prices are poised to rise.
Chief Chinedu Ukadike, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria (IPMAN), highlighted the impact of forex fluctuations on fuel prices.
He warned that the Nigerian public should brace themselves for an impending hike in petrol costs due to these market dynamics.
Ukadike explained, “Once there is slack in the naira against the dollar, there is going to be an effect. The demand and supply of forex is a key factor.” He acknowledged that multiple factors influence the demand for dollars, not just petroleum products.
He further elaborated, “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 per 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 pointed out that oil marketers continue to source dollars from the parallel market, reflecting the reality faced by most importers in Nigeria. With no longer-existing subsidies on petroleum products, the costs are expected to mirror dollar fluctuations.
The IPMAN official emphasized that the Nigerian National Petroleum Company Limited (NNPCL) remains the primary importer of petrol.
He mentioned that while another company, Emadeb, recently imported products, the challenges lie in the currency devaluation when dealing with naira transactions against dollar-denominated imports.
Ukadike indicated that once price adjustments are seen at NNPC outlets, other marketers are likely to follow suit, suggesting that the prevailing forex crisis may soon translate into higher fuel prices across the board.