By Adewale Sanyaolu
The lingering foreign exchange crisis and other operational hiccups in the downstream sector of the petroleum industry have jacked up the actual landing cost of Premium Motor Spirit (PMS) popularly called petrol, Daily Sun learnt on Thursday.
Records show that petrol price landing cost, in a deregulated economy such as Nigeria, is actually N1,424 per liter as against N568/per liter at NNPC retail outlets. This has fuelled suspicion that subsidy payment on petrol has returned and being paid under a hooded arrangement.
Meanwhile, oil marketers have sought an end to the dollarisation across the fuel supply chain whereby NIMASA and NPA charges are paid in dollars, saying the practice puts undue pressure on the naira and destabilises the system.
The current landing cost signals a departure from the position of President Bola Tinubu, who, in his inaugural address on May 29, 2023, declared an end to the subsidy regime.
Speaking at the Major Energies Marketers Association of Nigeria (MEMAN) Quarterly Press Webinar and Engagement with the topic ‘‘Advantages of Autogas (LPG and CNG) and the Evolving Price of PMS held yesterday, the Managing Director of 11 Plc, formerly Mobil Oil Plc, Mr. Tunji Oyebanji, said ‘‘prices of gasoline in a fully deregulated environment would probably be closer to the price of diesel’’.
According to Daily Sun findings across major depots in Apapa, yesterday, the ex-depot price for diesel and petrol stands at; N1,424 per litre and N623 per litre, respectively while MEMAN figures put diesel price at N1,200 as at February 2024
However, the Executive Secretary of MEMAN, Mr. Clement Isong, said he wouldn’t be able to speak categorically on the landing cost of petrol because his members have seized to import fuel.
He worried that when the market operates an exchange rate model that is speculative that further fuels inflation and makes the cost of replacement difficult, saying rates have been fluctuating.
“With this scenario it becomes difficult for me to determine the actual landing cost of petrol because rates have moved from N1,900 to a dollar to N1,800 and now to N1,600. So, in this case, it becomes difficult to adopt a particular exchange rate for the purposes of calculation.
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If I give you a number that doesn’t contextualise what I am saying to you and I don’t know the opportunities in the market because I am not in the market. So, I want to be extremely careful in telling you what the landing cost is. Rather, I would rather say you should direct the question to NNPC because they are in a better place to answer since they are the ones importing,’’.
Given a further breakdown of the dollar component in the fuel supply chain, Isong said there is a $10 charge port charge for per metric tonne of petrol and another $30 for ship-to-charge.
On the other hand, he said transportation rates have equally gone up and are now between N5 and N8 per litre, depending on the transporter and employer.
He said President Tinubu, in July 2023 promised that the administration will continue to monitor inflation and exchange rate movement and would be intervening to manage market operations to ensure energy security.
“We have seen those interventions at different times and it providing a level of stability but our advocacy is to encourage a paradigm shift to affordable energy options ” Isong explained.
Speaking on the transition to gas, a consultant on Liquefied Petroleum Gas, LPG, Mr. Femi Fanoiki, said efforts are currently moving towards driving LPG application in both the industrial and automotive services.
Fanoiki, explained that interventions by the government is encouraging investment in that space but said more infrastructure deployment will further boost adoption process.