The price of Premium Motor Spirit (PMS) , also called petrol, has been projected to rise as Dangote reviews its sales policy.
Dangote Refinery said it would now sell refined petrol in dollars until the government resumes crude-for-naira-sale arrangement.
Consequently, the Independent Petroleum Marketers Association of Nigeria (IPMAN) has threatened to sell petrol in dollars if the Dangote Refinery begins selling its products in foreign currency.
This raises concerns that using dollars for transactions could increase pressure on the local currency, potentially causing inflation and affecting energy security.
Dangote Refinery, in a notice, said it had temporarily halted the sale of petroleum products in Naira.
Management noted that this decision is necessary to avoid a mismatch between its sales proceeds and crude oil purchase obligations, which are currently denominated in U.S. dollars.
“To date, our sales of petroleum products in Naira have exceeded the value of Naira-denominated crude we have received. As a result, we must temporarily adjust our sales currency to align with our crude procurement currency.” the statement added.
It reaffirmed its commitment to serving the Nigerian market efficiently and sustainably, and assured that as soon as it receives an allocation of Naira-denominated crude cargoes from NNPC, it will promptly resume petroleum product sales in Naira.
The management also reacted to reports on the internet claiming that it is stopping loading due to an incident of ticketing fraud.
The management described this as a malicious falsehood, affirming that its systems are robust and had not had any fraud issues.
IPMAN’s national publicity secretary, Chinedu Ukadike, who reacted to the development, said that selling fuel in dollars would be necessary to mitigate the financial strain on marketers if Dangote Refinery adopts dollar-denominated transactions.
“This latest development, if implemented, will definitely put pressure on the Naira. It is not a very good thing for independent marketers.
“So, we want to appeal to the federal government to continue to give Dangote products in Naira so that it will not raise the demand for the dollars and put pressure on the Naira. Any moment from now, the dollar will be going up.And once the dollar goes up, it will bring unnecessary inflation, excruciating inflation, which is not good for our energy security.
“If the issue of dollar crude for products is true in Dangote, that means we at IPMAN will also resolve to sell our fuel in dollars because it will really put pressure on us,” Ukadike said.
He, therefore, urged the federal government to ensure that Dangote Refinery continues to transact in naira to avoid these economic challenges.
Reacting to the announcement, national president of Petroleum Product Retail Outlet Owners Association (PETROAN), Billy Gillis-Harry, described the unfolding scenario as unfortunate and capable of causing distrust in the market supply system.
Gillis-Harry said, already, the announcement is raising serious concerns among marketers as that would certainly increase prices of petrol which will further exacerbate the suffering of the masses.
He added that, at the end of the six-month pilot policy, which is renewable as envisaged at the inception of the crude-naira initiative, the government announced it had not jettisoned the policy, but the announcement by Dangote is raising more concerns about the sincerity of the government on the issue.
He said marketers were not in any way blaming Dangote, as he has the right as a businessman to adjust his prices to make a profit.
In his reaction, Eche Idoko, the spokesman of the Crude Oil Refiners Association of Nigeria (CORAN), said the association was disappointed that during the recent meeting by the government to discuss a possible review of the exercise, the association was not given the opportunity to send a representative.
He said, “The CORAN has made submissions stating the need to extend the offer to other refineries so as to make products affordable and accessible.”
According to him, the association frowns at the continuous importation of petrol into the country, given that the in-country capacity is enough to serve the domestic market.
On his part, the chief executive of the Centre for Promotion of Private Enterprise (CPPE), Muda Yusuf, said: “This is a disturbing development. It will significantly change the dynamics of domestic petroleum products pricing. The sustainability of the widely celebrated deceleration of petroleum product prices is now evidently at risk. We may see a reversal of the trend.
“There are other macroeconomic implications. Demand pressure on the forex market would be elevated, resulting in an exchange rate depreciation scenario. The foreign reserves may come under pressure. All of these could result in adverse macroeconomic outcomes with profound implications for investors’ confidence.”
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