There are strong indications that the current price of Automative Gas Oil (AGO), also called diesel, may rise further as marketers lament the persistent increase in the landing cost and uncertainty in exchange rate which marks up the selling pump price of the product.
LEADERSHIP’s findings show that the least landing cost of diesel is about N700 per litre, with marketers now contemplating adjusting upward the current selling price.
Our correspondent’s check across some major depots in Lagos showed that diesel is in short supply as marketers say profit margin is not encouraging.
The president of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Prince Billy Harry, who confirmed the situation to LEADERSHIP, said the association is planning to unveil its Power Capsule project.
Billy-Harry said his group had commenced discussions with an American firm which will help to install 15KVA to 52KVA battery/hydrogen power generating component at members’ outlets.
He said with the innovation, the members are working on introducing a cashless system where customers purchase products with cards to reduce operating costs.
According to him, the rising cost of diesel is eating up already diminishing profits.
The PETROAN president said marketers may soon jettison diesel importation given that though the product had been deregulated, marketers still cannot sell at any price they want.
“I can tell you that though the product is deregulated, there is a cap. The system through regulation would not allow marketers to determine prices which government may see as outrageous, so investing money in it is no longer profitable,” he said.
According to him, because the association has a duty to support the economy, it is investing in alternative sources of power which is a combination of solar and hydrogen to support and sustain the running of their outlets.
The association, he disclosed, currently has over 12,000 stations across the country, even as he reiterated the commitment of members of the association towards ensuring hitch-free petroleum products supply nationwide.
He also called for total deregulation of the downstream sector to boost investors’ confidence and provide level playing ground for operators.
Last week, the Major Oil Marketers Association of Nigeria (MOMAN) noted that, though ending subsidy on Premium Motor Spirit (PMS) is extremely difficult, the federal government has no other option in the light of current economic realities.
MOMAN also called for massive investment by the government in various sectors such as mass transportation, healthcare and education to successfully wean Nigerians off petrol subsidy.
Chairman of MOMAN, Mr Olumide Adeosun, made this known at the just concluded Association of Energy Correspondents of Nigeria (NAEC) Strategic International Conference in Lagos.
Represented by the chief executive officer, MOMAN, Mr Clement Isong, Adeosun said it would remain extremely difficult to wean Nigerians off cheap PMS, also known as petrol.
He said: “it is something that must be done as there are no more viable options. We are told that this year the subsidy bill to the federal government may be between N5 trillion and N6 trillion. Clearly, Nigeria cannot afford this.
“To wean Nigeria off this subsidy, a lot of investment must be done to sensitise Nigerians in convincing them and finding alternatives.
“We need to begin to remove the subsidy and mitigate the pains Nigerians will feel when petroleum prices begin to manifest their true value.”
Adeosun said marketers were optimistic that the industry was headed in the right direction with the enactment of the Petroleum Industry Act (PIA) 2021 which was an excellent piece of legislation.
“We are now at the point of implementation, which is taking a bit longer than hoped but this is not necessarily a bad thing.
“The president postponed the implementation of free market pricing, which has caused a slowdown with respect to benefits expected from free competitive open market pricing such as new investments and subsidy removal, ” he said
Adeosun said the marketers were also convinced that the decade of gas declared by the federal government in January 2021 was clearly the way forward.
He said, however, the increase in gas prices worldwide and the unavailability of the product had made it a little more difficult in the roll-out.
Adeosun said: “The ordinary Nigerian who was meant to transit to gas not just for cooking but also for powering automobiles and power generation is struggling because PMS pricing is yet to be fully deregulated.
“It creates an aberration and additional challenge for the adoption of gas, as most people are still dependent on cheap PMS for their cars and generators.”
Similarly, the group managing director, Rainoil Limited , Dr Gabriel Ogbechie, said the country stands to save over N12 trillion, which could be channeled for other areas of development for the country, if the downstream sector is fully deregulated
He said the global average price currently for PMS was N516 per litre, which is way higher than the N175 per litre it is being sold in Nigeria, and called on government to not only deregulate but also initiate a petrol tax to fund maintenance and construction of critical infrastructure across the country.
