Nigerians are bracing themselves for heightened economic challenges as indications arise of an imminent increase in the price of petrol ranging from about N680 to N720.
Oil marketers anticipate that the price of petrol could surge to a range of N680/litre to N720/litre in the upcoming weeks if the dollar continues trading at N910 to N950 in the parallel market.
They also disclose that due to the scarcity of foreign exchange for importing the commodity, dealers aiming to bring in PMS (Petrol) have been compelled to postpone their plans.
The Naira’s exchange rate against the US dollar has been consistently declining since President Bola Tinubu’s administration decided to eliminate multiple exchange rates.
The naira crossed the N900 to a dollar threshold last week, ending at N950 on Friday.
Chief Chinedu Ukadike, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria (IPMAN), in an interview with local news outlet Punch explained that petrol prices are now influenced by forex fluctuations, implying that Nigerians should anticipate an imminent increase.
“Whenever there’s a weakening naira against the dollar, there will be consequences. The supply and demand for forex are pivotal. It’s important to note that forex isn’t exclusive to petroleum products. Other manufacturers importing various goods also require dollars. The competition for dollars keeps growing. So now that the dollar is hovering between N910 to N940, and inching towards N1,000, prepare to pay around N750/litre for PMS.”
“It’s simple math. When the dollar strengthens, anticipate a rise in petroleum product prices, as they’re intrinsically linked to the dollar,” adds Ukadike.
According to Ukadike, oil marketers are still procuring dollars from the parallel market due to limitations in the Central Bank of Nigeria’s Importers and Exporters official window.
“If the exchange rate stays between N910 to N950/$, be ready for prices to range from N680 to N720. However, if the dollar reaches N1,000, expect the price to hit N750. This is because not just marketers but almost all importers in Nigeria are sourcing dollars from the parallel market. Petroleum products no longer enjoy subsidies, hence costs will fluctuate in tandem with the dollar,” he emphasizes.
Elaborating further, the IPMAN PRO revealed that although another importer, Emadeb, recently brought in the commodity, the Nigerian National Petroleum Company Limited (NNPCL) remains the primary petrol importer in Nigeria.
“NNPCL remains the main importer at the moment. Emadeb has also imported recently, but the challenge lies in selling the product in naira while dealing with depreciating naira against the dollar, which is used for PMS imports. This is why revisiting the market for another purchase as an independent importer is often intricate.”
Ukadike explained the timeline for the price increase, stating, “NNPCL acts as the predominant distributor of petroleum products now. Hence, once there’s a modification in petrol price at their outlets, other marketers will follow suit.”
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