Petrol Price Trend: Marketers Anticipate N700 per Litre for Petrol

According to oil marketers, the petrol price at the fuel station in Northern Nigeria is expected to surpass N700 per liter starting in July.

Mike Osatuyi, the National Controller of Operations of the Independent Petroleum Marketers Association of Nigeria, said prices could exceed N700 in the northern region once independent marketers commence product imports.

He explained that residents in the northern states might need to pay over N700 for a liter of petrol, while those outside Lagos could expect a price of approximately N610. Lagos residents, however, would likely pay around N600 per liter.

Osatuyi added, “Based on the exchange rate, the current international crude oil price, and the landing cost, I foresee prices around N600 and above. Those in Lagos will pay around N600, those outside Lagos around N600 plus, while those in the north would be paying anything from N700 and above.”

Currently, the downstream sector eagerly awaits new petroleum products as the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) continues granting licenses to operators interested in the importation business.

Olufemi Adewole, the Executive Secretary of the Depot and Petroleum Products Marketers Association of Nigeria mentioned that the NMDPRA is presently licensing more importers. He stated that preparations are underway to receive fresh products in July, and the pricing of these products will depend on market fundamentals.

“Where do countries like Ghana, Benin, and Cameroun get their products from? Is it not from Nigeria?” he asked, making reference to products being smuggled from Nigeria to neighboring countries.

“Prices of products will depend on market fundamentals, and as we speak, the Nigeria Customs Service is delaying some AGO (diesel) vessels because of the 7.5 percent VAT.

“And don’t forget, any cost incurred by marketers would be added to the landing cost and then to the pump price. The marketer would also have to add profit because they must make a profit,” he said.

During a recent conversation, Tunji Oyebanji, a former chairman of the Major Oil Marketers Association of Nigeria and CEO/Chairman of 11 Plc, indicated that consumers should anticipate new pump prices similar to those of diesel and neighboring African countries that also import petrol. According to the report, as of June 19, the price of one liter of petrol in Ghana, Cameroon, and Benin was already exceeding N800 per liter.

Currently, petrol is sold for approximately N495 or more in Nigeria, while diesel is approaching N800 per liter. Oyebanji emphasized that by looking at the prices of other West African countries that import petrol, we can gauge the future price once companies commence importation. If the current price in Nigeria is significantly lower than that of these countries, it implies that an adjustment is yet to be made. Additionally, he mentioned that the current diesel price should serve as another indicator.

However, Oyebanji also mentioned that the price could be reduced depending on the exchange rate. He stated that there will be a price adjustment, which might initially increase but could subsequently decrease based on the exchange rate. He highlighted that the positive aspect is the availability of products everywhere. If a particular filling station has higher prices than others nearby, it would be compelled to lower its prices to attract customers. This healthy competition would benefit the market.

Earlier, in a conversation, Osatuyi referred to the current petrol price as a “transitional price.” He stated that marketers are expecting a roadmap from the Federal Government following the removal of subsidies. He explained that labor unions gave the government two months to present the roadmap. Additionally, he mentioned the anticipation of a roadmap for the increased utilization of Compressed Natural Gas. Osatuyi noted that starting from July, three marketers have been confirmed to begin importing products, which would determine the actual price since it would inevitably rise. He emphasized that the current price is only a temporary one.

Since the Federal Government’s official statement regarding deregulating the downstream market on May 29, petrol prices have soared above N490 per liter at stations affiliated with the Major Oil Marketers Association of Nigeria and above N500 at IPMAN stations across the country.

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According to The Eyewitness9ja, the Chairman of IPMAN Satellite Depot revealed that marketers are currently loading products at the government-regulated price of N496 per liter.

He stated, “There are currently products in the country, and we are loading at a government price of N496.50 per liter. However, due to the new foreign exchange policy of the central bank, the value of the naira has risen to around N765/$1. We won’t know the exact impact of the new policy on our business until new products start arriving.”

Oyebanji also mentioned that depot owners now turn to local and foreign loans to finance their importation activities. He explained, “We have obtained importation licenses but stopped importing because it was no longer profitable. Now, everyone is exploring various options. Some individuals will raise funds and borrow from abroad, while others will seek loans from local banks. It’s not limited to just three companies; many companies are currently making efforts to start importing products. However, we won’t be publicly announcing these activities in newspapers.”

This development follows a report by Reuters stating that since Nigeria abolished fuel subsidies, black market fuel vendors and commercial drivers in Cameroon, Benin, and Togo have experienced collapsing businesses due to limited supplies and high prices.

“In Cotonou, the commercial capital of Benin, located about 60km from Nigeria, long queues have formed at official petrol stations, and some stations have been unable to meet the sudden surge in demand, particularly from ‘zemidjan’ which refers to motorcycle-taxis. A worker at the JNP fuel station named Janvier revealed, ‘Before, we used to sell around 2,000 liters per day, but now we’re selling up to 7,000 liters per day.’ He had just turned away four customers because supplies had run out.”