The price of gasoline can be as high as £ 190 and the price of oil is approaching $ 60.
Marketing experts said that given the current realities in global crude oil markets, the price of Premium Motor Spirit (gasoline) in Nigeria should be between 185 and 200 Argentines per liter if the government does not want to subsidize the product, ”FEMI ASU reports.
The rise in world oil prices last week again raised concerns among marketers about the failure to implement a complete deregulation of the refining sector, as prices for gasoline pumps have remained unchanged for more than two months.
Senior officials from two major marketing associations who spoke to our correspondents on Saturday said the continuing rise in oil prices has led to a cut in gasoline subsidies.
On January 11, PUNCH reported that sustained increases in global crude oil prices brought the cost of imported gasoline closer to current gasoline prices in Nigeria, and appears to have triggered a return to the gasoline subsidy.
Since November 13, 2020, when prices for the PMS pump last rose in the country, the price of the international oil benchmark Brent Crude has risen 43%, from $ 41.51 a barrel to $ 59.34 a barrel on Friday.
In December, fuel traders expected another upward correction in PMS prices to reflect further increases in crude oil prices, which closed at $ 51.22 a barrel on December 31.
However, the federal government has announced a price cut for N5 gasoline effective December 14, which has caused them to displease and question the deregulation of gasoline prices.
The price of crude oil accounts for a significant portion of the final cost of gasoline, and the country continued to spend a lot on oil imports for many years due to low domestic refining capacity.
According to the sellers, the price of a gas pump should be from 185 to 200 rubles per liter.
This product currently sells for between AU $ 160 and AU $ 165 per liter at many gas stations in Lagos.
Clement Isong, Executive Secretary / CEO of the Major Oil Marketers Association of Nigeria, said: “My members are based in Nigeria and care about the long-term sustainability of the industry and the country itself.
“So we know that depending on the exchange rate used, the price of the pump should be between 185 and 200 euros per liter.
“As long as we continue to sell the product at the price we currently sell, someone will bear the cost of the subsidy, and the country cannot afford the subsidy at this time.”
He said that the demand for gasoline in the country has increased significantly, adding that the security of supply is at risk.
Isong said smuggling could be resumed due to significantly different prices across borders that were recently opened.
“So we have to completely restructure our entire supply chain. We must reach the point where, if deregulation takes effect, recycling will resume in Nigeria. We need to find a way to ensure that Nigerians benefit from deregulation. I think this is what the discussion should be about. “
The Nigerian National Petroleum Corporation, which has been the country’s only oil importer in recent years, continues to rely on marketing, despite deregulating the oil sector.
Private oil trading companies continued to complain that their inability to access foreign exchange at official rates was hampering attempts to resume oil imports.
PUNCH said Friday that the federal government has announced talks with workers’ representatives on how to raise freight from £ 7.51 a liter to £ 9.11 a liter.
Freight transportation is one of the cost components of the landing of gasoline imported into the country.
The National Comptroller of the Independent Association of Oil Markets of Nigeria, Mike Osatui, told our reporter that the introduction of the new freight rate will increase gasoline prices.
He said: “Yes, we went back to subsidies, and from the information I have confirmed, the federal government is subsidizing about 1.8 billion N per day because now 70 million gallons are pumped every day because the borders were open. ; I don’t know where the fuel goes.
“The government cannot afford subsidies, and they are not in the budget. Therefore, fundamental market principles should take effect now.
“Based on $ 56 per barrel of crude oil, our pump price should be between 186 and 190 euros. But now that the oil price has even risen to $ 59, the pump price should not be lower than 200 N per liter. Nigerians cannot escape the rise in gasoline prices. ”
Osatui said that the rise in oil prices has already led to higher prices for diesel and kerosene in the country.
Petroleum Minister of State Timipre Silva said last September that the federal government has taken a step back in pricing gasoline, adding that market forces and the price of crude oil will determine the value of the product.
The federal government lifted the gasoline subsidy in March 2020 after lowering the gasoline price to NOK 125. Per liter from 145 N. E. Due to the sharp drop in crude oil prices. The decline in prices lasted until June.
For Nigerians, fuel pump prices have risen in four months: from 121.50 to 123.50 per liter in June to 140.80-143.80 in July, 148-N150 in August, N158-N162 in September and N163. -N170 in November.
In addition to the rise in world oil prices, the devaluation of naira last year also led to a significant increase in the price of imported gasoline.
If the price of gasoline remains unchanged amid rising oil prices, it means that the NNPC will again bear the final costs of the subsidy on behalf of the government, as it did for several years before it was canceled last year.
In July 2020, Silva said in a statement that the federal government has concluded that it can no longer bear the burden of the gasoline subsidy.
“After scrutinizing the economic implications of subsidizing LDCs for domestic consumption, the federal government has concluded that it will continue to carry the burden of subsidizing LDCs of trillions of naira annually, especially when the subsidy has benefited — mostly the rich, not the poor and ordinary Nigerians.” he said.
According to him, deregulation means that the state will no longer remain the main supplier of oil products, but will stimulate the private sector to take on the role of a supplier of products.
It is too early to say that we subsidize gasoline – NPC
The group’s general manager, company PR, Dr. Kenny Obateru, told our reporter on Sunday that everything that will be done regarding the price of the gas pump will be based on the recommendations of the oil product price regulators.
“The point is that NNPC is still the only importer of the product (gasoline). We hope more marketers join in importing the product so that the burden does not fall on the NNPC alone, ”he said.
When asked if the NNPC has started to bear the cost of the subsidy, he said, “I think it would be premature to say why it should be based on what PPPRA decides on pricing. The market is already deregulated. “
He added that the government wants to completely deregulate the market.
Source: – Punch ng