Exchange Rate: Marketers Deny Downward Adjustment In Petrol Pump Price

Petroleum product marketers and other operators in the downstream sector, have denied speculations that pump price of petrol at depot facilities have been adjusted downwards.

Also, LEADERSHIP reports that petroleum outlets are still selling at prevailing market prices.

Our Correspondent’s check at major depot’s in Lagos indicate that prices have not changed either.

A source close to depot owners said such would not happen now as the exchange rate is still fluctuating and the cost of hiring vessels to move products to Depot facilities is still within $70,000 to $80,000 a day.

The source also said the cost of freight and port charges are still paid in dollars

The national president of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, told LEADERSHIP that no such adjustment has taken place.

“I have placed an order for products and no one has said there is an adjustment and my association is still buying at old prices” he said.

Also, Independent Petroleum Marketers Association of Nigeria, IPMAN, BOT treasurer, Elder Chinedu Okoronkwo, also denied the speculations saying prices are the same for now.

A source around Major Energy Marketers Association of Nigeria, MEMAN, also denied the speculations.

The source said there could be an arrangement between Independent Marketers and the Nigerian National Petroleum Company Limited, where products are sourced directly by the marketers which might lead to such adjustment.

The source said that the business model for MEMAN is that they own depots and outlets and move products from their facilities to dispensing outlets which makes prices stable.

On the other hand Independent Marketers buy from depots and move to the individual filling stations and the third party transactions make their products a little higher but might change if they buy directly from NNPCL.

Also, an oil and gas expert, Emmanuel Iheanacho, said the improvement observed in the value of the naira, would not bring about an automatic reduction of petrol pump price.

Iheanacho, chairman, Integrated Oil and Gas Ltd, said in an interview with the News Agency of Nigeria (NAN).

He said that the clarification became necessary against the backdrop of the ongoing insinuations that the reduction in forex would reflect on sales of petrol.

According to him, this is because the price of gasoline at the pumps is not fully determined by market mechanisms such as exchange rate parities among others.

“Regardless of the landing cost of petrol in Nigeria, the current pump price is dictated by the government or the Nigerian National Petroleum Company Ltd., fiat.

“As a result, there is currently a huge disparity between petrol product landing cost and the pump selling price”.

He explained that the disparity constituted the apparent subsidy which continued to be paid on account of each litre of petrol consumed in the country.

“This situation would continue to subsist until the market is fully deregulated and liberalised.

“The pump price is stagnant because it is not subjected and responsive to market factors such as exchange rate parities,” he added.

The oil expert noted that other relevant factors which would have a bearing on the responsiveness of pricing would include the market condition.

”And these include if the market was freely competitive or not, if there is a dominant entity playing in the market who is exercising the power of monopoly.

He further noted whether other factors such as supply volumes truly dictated by demand, is forex equally available to all downstream traders?

“These factors inclusively interact in the trade to engender the necessary up and down movements in the pump price of petrol.

On pricing differentials between the various downstream traders, Iheanacho said this could be charged to each marketer’s market supply and distribution cost structures after the receipt of product allocations from the NNPCL.