Amidst growing concerns over Nigeria’s economic instability, oil marketers have issued a warning that the cost of Premium Motor Spirit (petrol) could soar to an alarming range of N680 to N720 per litre in the coming weeks.
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This potential price hike is contingent upon the trajectory of the dollar, which has been trading between N910 and N950 in the parallel market. The announcement highlights the dire consequences of the nation’s ongoing forex challenges on essential commodities.
According to industry insiders, the scarcity of foreign exchange necessary for importing petrol has led to a temporary suspension of importation plans by dealers. The Central Bank of Nigeria’s (CBN) Importers and Exporters official forex window, which features a lower exchange rate of about $740 per litre, remains illiquid and incapable of supplying the $25 million to $30 million required for petrol importation. This scarcity has forced dealers to put their importation intentions on hold.
The situation has become even more complex due to the recent depreciation of the Nigerian currency. The naira breached the N900 to a dollar ceiling, surpassing 945 to a dollar in the parallel market on Friday. This surge has compounded the financial pressures faced by oil dealers, leading to a suspension of petrol importation by many.
Emadeb, a notable marketer, who recently imported petrol, is now grappling with difficulties recouping their investment due to the naira’s depreciation. The fluctuating exchange rates and economic instability pose significant challenges for oil dealers’ viability.
Senior officials within major 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 called for the intervention of the Federal Government to address this escalating crisis.
Chief Chinedu Ukadike, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, highlighted the direct connection between petrol prices and forex fluctuations. He explained that the demand and supply of forex significantly influence petroleum product costs, as forex is pivotal to various industries’ operations.
While the Nigerian National Petroleum Company Limited (NNPC) is currently the primary importer of petrol, other importers have been hampered by forex challenges. Clement Isong, Executive Secretary of the Major Oil Marketers Association of Nigeria, stated that despite the government issuing licenses to several marketers to import products, the illiquidity of the CBN’s forex window has hindered these importation efforts.
As the naira’s value against the dollar continues to teeter, a potential petrol price hike looms. The government’s intervention is becoming increasingly necessary to prevent further economic strain. The petroleum industry’s struggles underscore the urgency of addressing the nation’s forex crisis and reinforcing the stability of the local currency.
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