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Wednesday, October 4, 2023

Forex Fluctuations Fuel Fears: Nigeria Braces for Petrol Price Hike

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ABUJA, Nigeria – Amidst the escalating dollar rates, especially in the parallel market, oil marketers have warned of an imminent rise in petrol prices.

They forecast a spike to N680 to N720/litre, correlating directly with the dollar trading between N910 to N950.

This alert comes a week after the local currency hit an alarming N900/dollar mark, with Friday’s rate teetering at a staggering N945/dollar.

Oil dealers expressed their concerns about the CBN’s Importers and Exporters official foreign exchange window.

While it promises a more favorable exchange rate, it is critically illiquid, making it unfeasible for oil marketers to source the $25 million to $30 million needed for PMS imports.

As a consequence, several oil dealers who had intended to import PMS are now holding off their plans, with the only recent importer, Emadeb, struggling to recover its investment amidst the plummeting value of the naira.

Senior officials from notable oil marketing associations, including the Major Oil Marketers Association of Nigeria, MOMAN, Independent Petroleum Marketers Association of Nigeria, IPMAN, and the Petroleum Products Retail Outlets Owners Association of Nigeria, unanimously called for the Federal Government’s urgent intervention.

On Sunday, August 13, 2023, IPMAN’s National Public Relations Officer, Chief Chinedu Ukadike, elucidated that PMS prices are now primarily driven by the volatile forex rates.

He said, “Once there is a slack in the naira against the dollar, there will be an effect. The demand and supply of forex is a key factor.”

Ukadike further stated that Nigerians should be prepared for a price band of N680 to N720/litre if the dollar exchanges around the N910 to N950 range.

However, he warned that prices could soar to N750/litre if the dollar reaches the N1,000 benchmark.

NNPC, Nigeria’s state-owned oil enterprise, remains the major importer of petrol.

Independent importers, such as Emadeb, are finding it challenging to sustain imports, with prices in the local naira currency while incurring costs in the more resilient dollar.

The Executive Secretary of MOMAN, Clement Isong, emphasized the urgent need for security resolutions in the Niger Delta to boost Nigeria’s daily crude oil production.

This surge in production will usher in more dollars into the market, offering a solution to the forex challenge.

Citing President Buhari’s earlier statement on the government’s commitment to intervene if petrol prices skyrocket, Isong expressed hope for a prospective governmental intervention to stabilize the situation.

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