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By Adewale Sanyaolu
Major Oil Marketers Association of Nigeria (MOMAN) yesterday, said that the fluctuations in foreign exchange rate has triggered increase of N100 per liter for imported Premium Motor Spirit (PMS), popularly called petrol.
Chairman of MOMAN, Mr. Olumide Adeosun, stated this during a webinar interactive session with the media yesterday.
Adesoun said the increase in petrol cost across the country yesterday was due to an upward swing in the Investors and Exporters(I&E) window.
‘‘As of today, the exchange rate is close to N825 to the Dollar. This devaluation adds N100 to the cost of importing a single litre of PMS into the country.
Consequently, an increase in the pump prices of petrol should be expected,’’.
He explained that in recent months, the price of PMS has remained relatively stable, adding that on 30 May 2023, Platts reported a price of $827 per metric ton (MT), and on 14 July 2023, it was $859.25 per MT.
However, he maintained that there has been a significant increase in the foreign exchange rate. ‘’We can infer from our calculations in May that the Nigerian National Petroleum Company Limited (NNPCL) determined its pump price using an exchange rate of about N630 to the US Dollar, while banks reported an exchange rate of approximately N650 on the Investors and Exporters (I&E) window,’’.
Adeosun while reiterating MOMAN’s support for the policy of deregulation in the petroleum industry. Said it acknowledge the challenges faced by the Nigerian public and extend its deepest empathy to all citizens during this time.
According to MOMAN, the international price of crude oil and the exchange rate constitute the largest components of the cost build-up for Premium Motor Spirit (PMS), accounting for over 80 per cent while the remaining 20 per cent includes; statutory dues, distribution costs, and margins.
Deregulation, he said, promises a transparent and level playing field where cost-reflective prices are evident at fuel stations, saying in a liberalized market, the pump price of PMS should accurately reflect the current economic realities.
‘‘In the spirit of transparency, MOMAN advocates for federal, state, and local governments, as well
as employers of labour, to implement palliative measures to support less privileged individuals in
society currently facing hardships. It is essential that rapidly executed palliative measures receive wide publicity to alleviate the already agitated public sentiments.
At MOMAN, we have always anticipated that the removal of subsidies and the stabilisation of the downstream market would be a gradual process. This process necessitates operators and regulators to engage the public transparently, earn public trust, and foster fair competition that ensures full value for customers at the fuel pumps. We commend the authorities for their urgent efforts in opening the market, allowing various players to import petroleum products into the country.
This market liberalisation and the commitment to a level playing field should enhance operators’ efficiency, enabling them to offer competitive pricing choices to the public. Some operators have successfully imported PMS into the country, marking the first practical step towards a liberalized market. However, the major challenges still lie in accessing foreign exchange for imports and ensuring a level playing field regarding pump prices. If marketers are undertaking the financial risk of importing petrol, measures must be in place, in line with the Petroleum Industry Act, to ensure that no one player has an unfair advantage’’.
