By Adewale Sanyaolu
Following a supply gap created by Dangote Petroleum Refinery’s withdrawal from the local fuel market, the Independent Petroleum Marketers Association of Nigeria (IPMAN) said it has been compelled to rely on imported petroleum products to fill the shortfall.
A member of the IPMAN Board of Trustees (BoT), Mr. Debo Ahmed, told Daily Sun in a telephone interview that marketers needed to address the void most urgently to avoid destabilising the domestic market.
This comes as the price of Premium Motor Spirit (PMS), popularly called petrol, increased by N70 per litre yesterday.
As of Sunday morning, MRS and Heyden filling stations, which had a deal with Dangote some weeks ago to sell at N860, adjusted their pump prices to N930 per litre.
Similarly, Conoil and Northwest filling stations followed suit, reflecting a new pump price of N930 per litre.
Ahmed said IPMAN members, who control about 80 percent of fuel retail outlets, are now at the mercy of importers.
He explained that the association now sources petroleum products from different importers in order to keep the country wet.
The IPMAN BoT member said the exit of Dangote has further compounded the woes of marketers.
The supply shortfall in the downstream petroleum market may not be unconnected with the decision of Dangote Petroleum Refinery, which appears to have suspended further sales of petroleum products to the Nigerian domestic fuel market.
Two weeks ago, the refinery announced that it was temporarily suspending fuel sales in the local naira currency to avoid a mismatch between sales in naira and crude purchases in dollars.
“To date, our sales of petroleum products in naira have exceeded the value of naira-denominated crude we have received. As a result, we must temporarily adjust our sales currency to align with our crude procurement currency.”
According to the Major Energy Marketers Association of Nigeria (MEMAN), the landing cost of petrol peaked at N870 per litre on Tuesday in Lagos, while in Port Harcourt, it hit N890 per litre.
However, the Depot and Petroleum Marketers Association of Nigeria (DAPPMAN) last week called for the discontinuation of the naira-for-crude policy.
Executive Secretary of DAPPMAN, Mr. Olufemi Adewole, warned that the policy presents significant risks that could affect Nigeria’s foreign exchange stability and deter Foreign Direct Investment (FDI).
On October 1, 2024, the Federal Government officially announced the commencement of crude oil sales to Dangote Refinery and other local refineries in the local currency.
Minister of Finance and Coordinating Minister of the Economy, Wale Edun, stated that the sale of crude oil to the 650,000 bpd refinery was initially approved by the Federal Executive Council (FEC) in July 2024, with transactions set to begin in October.
According to industry stakeholders, the naira-for-crude policy will reduce pressure on the dollar and ensure the stability of the local currency.
However, Adewole highlighted concerns over the volatility of the naira, emphasizing that crude oil transactions are traditionally carried out in U.S. dollars due to its stability and global acceptability.
He cautioned that failure to align with this international standard could isolate Nigeria from global markets, diminishing trade opportunities and discouraging investment inflows.
“The global oil market operates in U.S. dollars due to its stability. Continuing the policy could alienate trade partners and investors who rely on the predictability of the dollar,” he warned.
The DAPPMAN boss stressed the need for policies that recognize the unique nature of the oil and gas sector to ensure sustained national competitiveness.
He noted that reactionary policies often create skewed economic benefits that primarily favor select industry players rather than the broader economy.