Petrol price may go up – to at least N180 per litre.
Minister of State for Petroleum Resources Dr. Ibe Kachikwu, who dropped the hint in Abuja, said N145 per litre could no longer be sustained.
In a presentation he made to a joint committee on Petroluem (Downstream) of the Senate and the House of Representatives, the Minister put the landing cost of petrol at N171 per litre.
According to him, the Federal Government, through the Nigerian National Petroleum Corporation (NNPC), has been bearing the cost of N26 per litre, representing the difference between N171 and N145 per litre.
Independent marketers, Kachikwu said, would not be able to import Premium Motor Spirit (PMS) at the current foreign exchange rate. They were able to sell for N145 per litre when the exchange rate was N285 per dollar.
The naira exchanges for N365 to dollar.
Kachikwu said the NNPC had incurred a cumulative loss of N85.5 billion importing petrol and selling at the current retail price of N145 per litre within three months.
He said N145 per litre was fixed in the first quarter of 2016 when crude oil was selling for $49. With crude price rising to $67 a barrel ($68 yesterday), the pump price is no longer sustainable, he claimed.
Kachikwu said the landing cost of PMS, which was N133.28 per litre in 2016, is now N171 per litre.
This forced independent marketers to stop importing petrol.
The NNPC has been the sole importer since October.
“We now have to go back and find solution to this problem to ease supply gaps and ensure availability of the product at all times,” the Minister said.
Kachikwu, however, proffered three alternative solutions to pump price increase:
getting the Central Bank of Nigeria (CBN) to introduce a modulated foreign exchange rate specifically for importers of the product; giving the marketers significant tax adjustments to enable them absorb the high cost; and a plural pricing system whereby the NNPC would continue to sell at N145 through its numerous outlets while the marketers are allowed to fix their own price.
The Minister identified causes of the last fuel scarcity to include diversion of products, logistic constraints, bottleneck associated with clearance, bad road network, insufficient product reserves, smuggling through land borders, supply gaps and enforcement challenges.
Marketers stopped importing fuel in October, 2017, as a result of their inability to access foreign exchange from the CBN, leaving only the NNPC to import the product. This has left a wide gap between demand and supply, Kachikwu said.
He said the price of petrol rises when the price of crude oil goes up in the international market, stressing that in such instances, Nigeria spends more to import refined products.