ABUJA, Nigeria – The continuous depreciation of the Nigerian naira and the escalating exchange rate are anticipated to lead to a significant increase in the price of petrol in Nigeria, with indications suggesting that the price could reach N581 per litre in the upcoming days.
At present, the national average pump price for petrol is N500 per litre, a rate determined with an exchange rate of N661 to the US dollar.
However, as the exchange rate continues to rise, the national average price is expected to follow suit.
Oil marketers, who spoke on the matter, noted that the declining value of the naira implies that their costs have also risen beyond the figure used in establishing the current pump prices.
Preliminary findings have shown that many major oil marketers have adjusted their prices to between N492 and N495 in Lagos, a sharp increase from the N488 that was initially anticipated after the removal of subsidy was announced by President Bola Tinubu on May 29, 2023.
Additionally, most independent marketers in Lagos have adjusted their prices to an average of N515, and outside Lagos, the pump price has soared to over N650.
Marketers have noted that given the closing rate at the Investors and Exporters (I&E) foreign exchange window over the past week, which stood at approximately N770 to the US dollar, the pump price could potentially hit N550 per litre by the beginning of next month.
In light of the new market regime, oil marketers have started the process of importing the product. However, due to the changes driven by foreign exchange rates, marketers are struggling to raise funds for the importation of petrol, finding the business environment uncertain.
Though some oil marketers have initiated negotiations with banks, these discussions are often hindered by the current volatility in the business environment.
Despite the challenges, oil marketers are determined to import commercial quantities of petrol.
11 Plc and Ardova are expected to make the first deliveries by mid-July.
Olumide Adeosun, the CEO of Ardova Plc and Chairman of MOMAN, stated that it takes time to arrange the forex and deal with logistics, vessel availability, and other issues.
He added, “We expect to see some inflows from non-NNPC Limited sources in July 2023.”
He also commented that prices might increase before they eventually come down.
The Managing Director/CEO of 11 Plc, Adetunji Oyebanji, confirmed his company’s plans to import the product and estimated it to occur by mid-July 2023.
For at least the next month, major and independent oil marketers will still be dependent on NNPC Limited to bring in the product from the global market.
