Major oil marketers under the aegis of the Major Energies Marketers Association of Nigeria (MEMAN) have complained that the dollarization of some charges by government agencies like the Nigeria Ports Authority (NPA), the Nigerian Maritime Administration and Safety Agency (NIMASA) and others, is affecting the supply and distribution of petroleum products.
It stated that the country’s petroleum products distribution and supply chain may face more challenging complexities going by current foreign exchange market intricacies.
This was made known by the Executive Secretary of MEMAN, Clement Isong, while speaking at a media forum organised by the association on Thursday, March 7, 2024, in Lagos.
Isong complained that the complexities of the forex market uncertainty have stopped members from embarking on the importation of Premium Motor Spirit, PMS, otherwise known as petrol.
He said that it is not easy to put together a correct mathematical calculation of the product’s landing cost to further determine the appropriate pump price.
Dollarization policy affecting investment, pushing prices up
The Executive Secretary while sharing his members’ position on the present industry value chain conundrum said their investment is not fully protected with dollarisation of certain charges.
- Isong said, “The market and consumers are not immune to government policy that allows Nigeria Ports Authority, NPA, and the Nigerian Maritime Administration and Safety Agency, NIMASA, continuous charges in dollars.’’
He noted that though oil marketers receive products from the Nigerian National Petroleum Company Limited, NNPCL Trading, ship-to-ship (STS) products offload is transacted in dollars all of which pushes up the cost of the pump price.
- He said, “We are presently concerned about sustainability, efficiencies, and affordability of energy for Nigerians and we are encouraging the shift to energy transition specifically into gas space.’’
Speaking more on the development, Isong said though the Federal Government has been faithful in its avowed intervention process since it exited the petrol subsidy regime, the dollarisation policy is weakening the industry and discouraging investment.
He placed the blame mostly on fluctuating dollar movement and the unpredictability of the rate.
For instance, he said marketers pay Government Agencies (NPA, NIMASA, etc) about $10 per metric ton, and given the current exchange rate would translate to a higher pump price.
Analysing the forex market impact on the business, he said in 2023 when President Bola Tinubu removed the subsidy, and with the exchange rate at that time the cost of a litre was about ₦4.85 and with the dollar at about ₦1,600 today it has added up to about ₦11.83 a litre, and for STS at $30 per metric ton which was ₦14.54 today with the dollar at ₦1,600 that has pushed it up to ₦28.44 which is adding up to the pump price.
Speaking on Transportation, lsong said even with separate negotiations by marketers, transporters charge between an average of ₦5-₦8 per litre more.
He said with the unbearable rising cost, the Association’s ongoing advocacy is towards leveraging gas as an alternative source of energy.
