Petroleum depots throughout Nigeria are experiencing a decrease in activity due to a lack of products brought on by fluctuations in the foreign exchange rate. As a result, the landing cost of Premium Motor Spirit (PMS), also known as petrol, has jumped from N651 per litre in August to N720, a development that is making it harder to sustain business operations in the oil industry.
Several oil traders are warning that filling stations are closing down increasingly and shortages abound in many depots across the country, portending a severe fuel scarcity that could degrade social and economic activities in the coming months.
Benneth Korie, the National President of the Natural Oil and Gas Suppliers Association of Nigeria (NOGASA), lamented the situation and revealed that depot owners are finding it challenging to secure bank loans as high interest rates caused by unstable currency and rising dollar prices have made borrowers wary. Independent and major petroleum marketers are equally reeling from the impact of the skyrocketing landing costs.
Korie called on the government to take swift action to prevent the sector’s collapse and the far-reaching consequences it would have on Nigeria’s economy.
Patrick Ilo, the CEO of PETROCAM Trading (Nig) Ltd., further revealed that the company recently imported 52,000 metric tonnes of petrol at N720 per litre without subsidies. He posited that the product’s pump price in Lagos should have been around N729 per litre if the Federal Government had indeed stopped subsidizing petrol.
Ilo blamed the price hike on the high foreign exchange rates, suggesting that the Nigerian National Petroleum Company Limited, NNPC was still subsidizing petrol and that NNPC’s tacit subsidy was over N100 per litre, making the situation quite complex.
The Central Bank of Nigeria’s current exchange rate is around N766/$1, with the parallel market rate estimated at N990/$1.