The country’s petroleum products distribution and supply chain may face more challenging complexities going by current foreign exchange market intricacies.
Major downstream marketers, under the aegis of Major Energies Marketers Association of Nigeria (MEMAN), gave the warning last week in Lagos.
Mr Clement Isong, the Executive Secretary of the Association, spoke at MEMAN quarterly webinar and engagement with the media forum, tagged: ‘Advantages of Autogas (LPG and CNG) and the evolving price of PMS.
Isong explained that the complexities of the forex market uncertainties had stopped members from embarking on the importation of Premium Motor Spirit (PMS), otherwise known as petrol.
He said that it was not easy to put together a correct mathematical calculation of the product’s landing cost to further determine the appropriate pump price.
The Executive Secretary, while sharing his members’ position on the present industry value chain difficulty, said their investment was not fully protected with dollarisation of certain charges.
According to him, the market and consumers are not immune to government policy that allows Nigeria Ports Authority (NPA) and the Nigerian Maritime Administration and Safety Agency (NIMASA) continuous charges in dollars.
He said that, though marketers received products from Nigerian National Petroleum Company Limited (NNPCL), ship-to-ship products offload was transacted in dollars all of which pushes up the cost of the pump price.
“We are presently concerned about sustainability, efficiencies, and affordability of energy for Nigerians and we are encouraging the shift to energy transition, specifically into gas space,” Isong said.
He maintained that, though the Federal Government had been faithful in its avowed intervention process since it exited the petrol subsidy regime, the dollarisation policy was weakening the industry and discouraging investment.
He placed the blame mostly on fluctuating dollar movement and the unpredictability of the rate.
For instance, he said, marketers paid government agencies (NPA, NIMASA, etc.) about 10 dollars per metric ton, and given the current exchange rate this would translate to a higher pump price.
Speaking further on the forex market impact on the business, Isong noted that in 2023 when President Bola Tinubu removed the subsidy, and with exchange rate at that time the cost on a liter was about N4.85.
“Today it has added up to about N11.83 a liter, and for STS at $30 per metric ton which was N14.54 today with the dollar at N1,600 that has pushed it up to N28.44 which is adding up to the pump price.
On transportation, lsong said even with separate negotiations by marketers, transporters charged between an average of N5 to N8 per liter more.
He said with the unbearable rising cost, the association’s ongoing advocacy was geared toward leveraging gas as an alternative source of energy.
Isong advised depot operators and filing stations to consider moving to use Compressed Natural Gas (CNG) and other renewable energy sources like solar; in other to break even and operate efficiently.
Clarifying the issues of return of subsidy, however, Isong noted that the industry was witnessing consistent intervention initiatives by the government which, perhaps, the public misconstrued as subsidy payment.
He recalled that in July 2023, President Tinubu promised that the administration would continue monitoring the effects of the exchange rate and inflation on gasoline prices and when necessary, the government woud intervene.
“We have seen those interventions at different times, and they provide a level of stability, but our advocacy is to encourage a paradigm shift to reduce operating costs.
” Trucks are encouraged to move from diesel to CNG; depots and retail outlets to move from diesel to CNG and/or solar energy,” Isong explained.
Speaking on the transition shift to gas, Mr Femi Fanoiki, a consultant on Liquified Petroleum Gas (LPG), said efforts were being made toward driving LPG application in both the industrial and automotive services.
Fanoiki explained that interventions by the government were encouraging investment in that space, but said more infrastructure deployment would further boost the adoption process.
Speaking on the advantages of CNG, Mrs Adelanke Dayo-Adepoju, Gas and Renewable Energies Specialist at MEMAN, stressed on the benefits of shifting focus on CNG as an alternative to petrol and diesel.
She said concerted efforts had been made to convert about one million vehicles to run on fuel by 2027 and the establishment of over 1,000 conservation workshops across the country.
