The Major Oil Marketers Association of Nigeria has noted that over 80% of the current increase in petrol pump prices is attributed to foreign exchange and global crude pricing.
This was mentioned in a press release from the Association dated July 19.
According to MOMAN, the exchange rate and the price of crude oil on the global market account for more than 80% of the cost build-up for Premium Motor Spirit, generally known as fuel.
The remaining 20% consists of margins, distribution charges, and statutory dues.
According to MOMAN’s press release, deregulation provides a clear, equal playing field where fuel pricing is transparent and reflects costs.
“In recent months, the price of PMS has remained relatively stable,” according to the announcement.
Platts quoted a price of $827 per metric tonne on May 30, 2023, and $859.25 per MT on July 14, 2023. However, the foreign currency rate has significantly increased.
The Nigerian National Petroleum Company Limited reportedly used an exchange rate of about N630 to the US dollar to establish its pump price, according to calculations made in May, while banks reported an exchange rate of roughly N650 on the Investors and Exporters window.
“As of now, the dollar to N825 liquid exchange rate is close. This depreciation raises the price of importing one liter of petrol by N100 to the cost of importing a single liter of PMS into the country. Consequently, an increase in the pump prices of petrol should be expected.”
According to MOMAN, given the current circumstances, it is only fair for the government at all levels and employers to put in place palliative measures to aid less fortunate members of society who are currently going through challenges.
The group made it plain that it supports market liberalization, but operators and authorities must interact with the public in a transparent manner, gain their trust, and promote fair competition that guarantees customers receive the full value at the petrol pumps.
The statement also added that “The introduction of PMS into the country by a few operators represents the first concrete step towards a liberalized market. However, getting foreign currency for imports and guaranteeing a level playing field with regard to pump pricing continues to be the main obstacles.
MOMAN also emphasized crucial areas that would guarantee the reduction of fuel subsidies was implemented successfully:
Effective and long-lasting implementation of the gains from subsidy removal where gains should be allocated to social investment programs for healthcare, education, and infrastructure development (such as roads, railways, and power), as well as transparent, prompt palliatives like subsidized transport.
