Marketers seek N165 petrol price, FG says no

Petroleum product marketers have demanded an upward review in the pump price of the Premium Motor Spirit (also known as petrol).

This, they said, would make importation of the product profitable.

They said the free fall of the naira against the dollar had made it unprofitable for them to import petrol and sell at the current rate of N145 per litre.

But the Federal Government said there was no immediate plan to raise the pricce of petrol.

This is coming nearly four months after the government increased petrol prices from N86 and N86.5 per litre to between N135 and N145 per litre.

Some marketers had early last month said Nigerians should prepare for another increase in petrol prices due to the continued scarcity of foreign exchange to finance the importation of the product.

According to a source close to the Major Oil Marketers Association of Nigeria, N165 is the pump price that will cover the cost of forex required for fuel importation.

The Petroleum Products Pricing Regulatory Agency had, in its template based on 30 days’ moving average Platts posted price for April 23 – May 23, 2016, put the landing cost and total cost of petrol at N122.03 and N140.40 per litre, respectively.

The costs of the product and freight, which are the elements mostly affected by the exchange rate, were put at $534 per metric tonne of petrol or N111.30 per litre, using an exchange rate of N280/dollar.

Using an exchange rate of N314.20/dollar at the interbank market on Monday, according to FMDQ OTC Securities Exchange, the cost of product plus freight was N125.12 and the total cost of petrol stood at N151.93 per litre.

With an exchange rate of N350/dollar, the cost of the product plus freight stood at N139.37; while the total cost amounted to N167.15 per litre.

The naira plunged to all-time low of 420/dollar on the black market last month.

An official of one of the marketers’ associations, who spoke on condition of anonymity to one of our correspondents, said, “Let the government do the needful. We have already said it before that the price is not sustainable. When they fixed that price, dollar was N280 – N285; now the dollar is almost N400 and they want us to bring in products and sell at N145. It is not possible.

“But right now, most of us are getting the product from the NNPC; that is why you still see that there is product everywhere. It is an indirect case of subsidy. It means the government is subsidising it through the NNPC and we are buying at local price. Had it been that we were the ones that sourced the foreign exchange, we can’t sell it at N145.”

The Head of Energy Research, Ecobank Capital, Mr. Dolapo Oni, noted that the current template was adopted when the dollar was about N315 in the parallel market and the naira had not been floated then.