Increased landing charges, FX rates may trigger another rise in fuel price

Oil marketers have pegged the new pump price to fall between ₦680/litre and ₦720/litre in the coming weeks should the dollar continue to trade from ₦910 to ₦950 per dollar at the parallel market.

This impending PMS pump price increment will signal the third time the price of the commodity has been raised within 10 weeks. According to oil marketers, the factors such as the landing cost and FX rates which caused the second increment witnessed in July have further worsened.

Oil marketers said the landing cost of petrol has increased month-on-month, MoM, by 37.4%; from ₦460/litre in June 2023 to ₦632.17/litre in July 2023.

The petrol landing cost in Nigeria is made up of several components which include product cost, traders and insurance margin, shipping, charges by government agencies, financing and banking charges and storage charges

All these combine to bring delivery at filling stations at nearly ₦700/litre.

Added to the landing cost, the naira crossed the ₦900/dollar ceiling selling at over ₦945/dollar at the parallel market last week, thus depreciating by about 6.5% in the official market and 25% in the parallel market since the last pump price raise.

Oil dealers have also lamented they have been unable to source the required $25 million to $30 million for the importation of PMS at the CBN’s Importers and Exporters' (I&E) official window for foreign exchange.

Accordingly, petrol dealers have resolved to suspend import and The Punch reports that the only marketer, Emadeb, who succeeded in importing PMS recently is currently having difficulties recouping its investment due to the Naira depreciation.

While commenting on the issue, the National Operations Controller, Independent Petroleum Marketers Association of Nigeria, IPMAN, Mike Osatuyi noted that although the high crude prices meant good business for the FG, Nigerians would still pay a higher amount for fuel due to the deregulation of the sector. 

He however said there are hopes that the prices will fall as a result of competition in future.