Petrol Prices Set to Soar: Oil Marketers Warn of Impending Increase Amid Currency Volatility

Oil marketers have issued a dire warning about the imminent rise in the cost of Premium Motor Spirit (PMS), commonly known as petrol, which could surge to a range of N680 to N720 per litre in the coming weeks.

The potential price hike is contingent upon the continued fluctuation of the Nigerian naira against the US dollar, particularly if the dollar maintains its trade rate between N910 and N950 in the parallel market.

The revelation has sparked concerns within the energy sector as dealers face mounting challenges in securing foreign exchange to import fuel. The scarcity of foreign currency has compelled some dealers to put their plans to import PMS on hold, exacerbating the potential for supply shortages.

This alarming development follows closely on the heels of the naira’s recent plunge, crossing the critical N900/dollar threshold, and reaching an unsettling rate of over 945/dollar in the parallel market. The situation has raised fears of an impending crisis in the oil and gas industry.

Oil dealers have shed light on the debilitating effects of the scarcity of foreign exchange. They cite the struggles of Emadeb, one of the few importers of petrol in recent times, which now grapples with recouping its investments due to the sharp depreciation of the naira.

Prominent officials from major oil marketers have sounded the alarm, emphasizing that a surge in the price of PMS is inevitable unless the local currency regains stability against the dollar. The Major Oil Marketers Association of Nigeria, Independent Petroleum Marketers Association of Nigeria, and Petroleum Products Retail Outlets Owners Association of Nigeria have jointly urged the Federal Government to step in and address the crisis before it escalates.

Chief Chinedu Ukadike, National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, highlighted the direct correlation between forex fluctuations and petrol pricing. He stressed that the recent spike in the dollar’s value against the naira would undoubtedly trigger an increase in PMS costs.

Ukadike outlined the interconnected nature of forex demand and supply, with multiple sectors, including petroleum products and various other imports, competing for limited dollars. He projected that if the dollar’s exchange rate remains within the range of N910 to N950, the price of PMS could rise to around N750 per litre, delivering a significant blow to consumers’ wallets.

The situation is compounded by the limited liquidity of the Central Bank of Nigeria’s Importers and Exporters official window, which offers a lower exchange rate for foreign exchange. This has prompted oil marketers to resort to the parallel market for sourcing dollars, further straining the already fragile situation.

As Nigerians brace themselves for the potential price increase, Ukadike emphasized the significant role of the Nigerian National Petroleum Company Limited (NNPC) as the primary importer of petrol. While another company, Emadeb, recently imported the commodity, its challenges in recouping funds due to currency depreciation underscore the complexities faced by independent importers.

The impending price surge is expected to materialize first at NNPC outlets, subsequently rippling through other petrol stations across the country. The uncertainty surrounding petrol prices underscores the urgency for government intervention to stabilize the exchange rate and avert a potential fuel crisis that could have far-reaching economic implications.