Petrol pump price may sell above N340/litre by February 2022

Oil marketers in Nigeria on Tuesday said the pump price of Premium Motor Spirit (PMS), popularly called petrol, may sell higher in February 2022 above the projected N340/litre when the Federal Government removes fuel subsidy.

Also, it was gathered that both independent and major oil marketers were perfecting plans to resume PMS imports once the government halts the subsidy regime.

The independent and major oil marketers expressed worry over the instability in foreign exchange rates and how this would impact petrol price next year.

At a World Bank event in Abuja last week, Mele Kyari, the Group Managing Director of NNPC, had announced that petrol would sell for between N320 and N340 per litre from February 2022 after the removal of the government’s subsidy on the commodity.

The current pump price of petrol at filling stations in the country is between N162 and N165/litre, although the product is mostly sold at the upper N165/litre rate due to recent challenges in the downstream oil sector.

However, on Tuesday marketers warned that if there was no improvement in the foreign exchange rate, the cost of petrol would be higher than the projected N320 – N340/litre.

Most of the filling stations across the country are owned by dealers under the aegis of the Independent Petroleum Marketers Association of Nigeria (IPMAN) and Petroleum Products Retail Outlets owners Association of Nigeria (PETROAN).

IPMAN’s National Vice President, Abubakar Maigandi said, “Yes, if there is no subsidy, some marketers can import, but the only thing is that it will be costly. The price will be higher than the projected cost because of the exchange rate.”

“The challenge of accessing forex will definitely affect imports because over 90 per cent of petrol that will be consumed across the country will depend on importation. Also, this is because the refineries are not functioning.”

Also, Chief Ukadike Chinedu, the National Public Relations Officer, IPMAN,  shared the same view with Maigandi. He said the foreign exchange rate would determine the cost of petrol from next year after subsidy removal.

“If the Federal Government says there is no going back on subsidy removal this time around, which is a challenge that has dragged on for about 30 years, then it means that they are going to liberalise the market.

“By liberalising the market it will now help independent and major marketers to be able to freely import petroleum products from any source so that products will be available in Nigeria.”

“However, it is pertinent to note the forces of demand and supply will determine the price of the commodity in Nigeria. So literally, whatever the dollar rate is in the international and local markets will pose the actual challenge to marketers.”

“The issue of black market and official exchange rates is a serious challenge that we foresee. But we believe that the Federal Government is doing something by meeting with the bureau d’change operators on this so that whatever is obtainable at the banks is what you get in the open market.”

Chinedu added that “Aside from the adverse effects of the removal of subsidy on the wellbeing of Nigerians, we will, of course, see a price that is higher than what they project.

“The price will be higher. It will be higher because the dollar to a large extent determines the price of petroleum products. If the dollar goes up, the price of petrol will increase, and vice versa.”

Billy Gillis-Harry, the President PETROAN, said, “At PETROAN we already have a vehicle that is in place to start importation of petroleum products, gas, and other products. We encourage the government to completely remove subsidy.

On the possibility of higher pump price than the projected N340/litre, Gillis-Harry said, “That is why we said that every single thing about petroleum products should be premised on the forces of the market.

“The forces of demand and supply should determine the price.”