RICHMOND, Texas. (VOICE OF NAIJA) – The Nigerian naira has witnessed a further decline against the United States dollar, plummeting from 900 to 920 at the black market in a span of just one day.
This fall has ignited concerns among oil marketers, who are now hinting at a possible increase in the pump price of Premium Motor Spirit (PMS), commonly referred to as petrol.
The ongoing depreciation of the naira against the dollar has stirred discussions within economic circles, with the oil and gas sector particularly affected. Notably, this week’s downward trajectory in the naira’s value has unsettled key economic stakeholders.
As the exchange rate stands at 920 naira per dollar, oil dealers and marketers have raised doubts about the sustainability of the current pump price for petrol, which is set at 617 naira per litre. They project that if the current exchange rate persists, the price of petrol could reach a range of 680 to 700 naira per litre.
It’s worth noting that during the time when the petrol price was set at 590 to 617 naira per litre, the foreign exchange rate hovered around 750 to 800 naira per dollar. This contextual shift is leading oil marketers to assert that either the government is secretly subsidizing the commodity or it might need to consider a price adjustment.
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While the government has maintained its stance against increasing the petrol price, reports say some industry insiders claim that this might indicate a concealed subsidy to account for the fluctuating exchange rates. Calculations based on the projections made by these industry experts imply that the government could potentially be providing a subsidy of around 90 naira per litre due to the currency’s depreciation against the dollar.
As of Thursday, the ex-depot price of petrol was approximately 585 naira per litre. Given the projected price range of 680 to 700 naira per litre and the prevailing exchange rate, the government might be compelled to offer a subsidy of about 95 naira per litre.
According to recent data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority, daily petrol consumption in Nigeria hovers around 52 million litres. Extrapolating this figure with the projected subsidy indicates that the government could be expending roughly 153 billion naira monthly on fuel subsidies.
Amidst these discussions, the Special Adviser to the President on Media and Publicity, Ajuri Ngelale, reaffirmed the President’s commitment to maintaining the current petrol price. He emphasized that there would be no increase in the pump price of petrol, as previously stated by the NNPC Limited.
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The NNPC Retail, a subsidiary of NNPC responsible for retailing refined petroleum products, also joined the conversation, assuring customers that there were no plans to raise the pump prices despite speculations. The company encouraged customers to purchase high-quality products at reasonable prices from their retail stations nationwide.
In a related vein, the Independent Petroleum Marketers Association of Nigeria (IPMAN) reasserted that the fluctuating exchange rate’s impact on the landing cost of petrol was a significant factor in potential price adjustments. They contended that until there’s a notable influx of dollars into Nigeria, the rising dollar value would continue driving up the cost of petrol.
With oil marketers consistently flagging concerns over the exchange rate’s impact on petrol prices, the possibility of a fuel price hike looms, challenging the government’s commitment to maintain the status quo.