Petroleum product marketers have argued that the only way to shield Nigerians from the shock of a sudden surge in petrol prices is for the Federal Government to sell crude oil to the Dangote Petroleum Refinery and other local refineries at subsidised rates.
The marketers, therefore, urged the Federal Government to sell crude oil to domestic refiners with a subsidy to prevent a sharp increase in petrol prices.
Specifically, the Independent Petroleum Marketers Association of Nigeria appealed to President Bola Tinubu to consider subsidising crude prices while also extending the naira-for-crude deal to other modular refineries operating in the country.
The PUNCH recalls that the Dangote refinery recently effected a price hike, pushing the pump price of petrol to N839 per litre at MRS and other filling stations.
A few days later, crude prices surged above $70 per barrel in the global market, fuelling speculations that petrol prices could rise to N1,000 per litre in Nigeria, especially in locations far from the refinery or major tank farms.
Speaking on the development, the IPMAN spokesman, Chinedu Ukadike, said a subsidised crude oil supply had become critical to absorbing the shock of any possible price surge.
Crude oil prices, which serve as the main feedstock for refineries, change constantly, and such fluctuations directly affect the prices of petrol, diesel, and other fuels.
Ukadike said the Federal Government should offer refineries a ‘special deal’ on crude oil to act as a buffer, helping to keep pump prices stable even when global crude prices rise. In an interview with our correspondent, he said, “We need to consider crude oil subsidy.
The Federal Government can see how to subsidise crude oil being given to Dangote in naira.”
According to him, subsidised crude would help prevent what he described as a sudden increase in petroleum product prices, which often impacts the cost of domestic goods and services.
“The subsidy will ensure that there is no sudden increase in domestic goods and services. We are making this request now that the Federal Government should subsidise the crude oil it sells to Dangote and other refiners producing fuel locally,” he stated.
The IPMAN spokesman explained that the reason the refinery recently asked marketers to top up payments already made for petroleum products by N100 per litre was due to the rise in global crude prices, urging the Federal Government to consider the possibility of a crude subsidy.
Last Monday, the Dangote refinery announced an increase in its gantry price of petrol from N699 to N799 per litre. The adjustment pushed Dangote’s gantry price to about N70 higher than the landing cost of imported Premium Motor Spirit.
Findings by The PUNCH showed that marketers who had completed payments and processed final slips at N699 per litre were later asked to top up to N799 per litre before loading. This followed the refinery’s withdrawal of its temporary festive price support and the invalidation of previously issued loading authorisations.
Our correspondent reports that following the price increase by the Dangote refinery, most filling stations across the country adjusted their pump prices.
In Lagos, petrol prices ranged from N830 to N859 per litre. The Nigerian National Petroleum Company Limited sold PMS at N849 per litre along the Lagos-Ibadan Expressway. MRS filling stations dispensed the product at N839 per litre, while a few outlets sold at prices slightly lower than those of the Dangote-partnered MRS stations.
With the increase in petrol prices, Ukadike said fuel sales had slowed compared to the December festive period, noting that many consumers were becoming more conservative in their fuel consumption.
“The market is becoming slow now, unlike in the festive season when the prices were low. People were filling their tanks then, but now, people are becoming conservative because of the price increase,” the IPMAN leader stated.
Although the price of Brent crude settled at $69.32 per barrel on Sunday evening, Ukadike warned that unless crude prices decline to around $60 per barrel, petrol pump prices would continue to face upward pressure.
According to him, crude oil prices and exchange rates remain the major determinants of fuel pricing, stressing that changes in either would affect how petroleum products are sold in the domestic market.
Ukadike further warned that petrol could hit N1,000 per litre if the crude price surge persists, particularly in areas far from fuel depots. “The crude surge will definitely affect our local market. The price of petroleum products will come down if the crude price goes down; that’s the common principle of the market,” he said.
He added that the rising cost of crude oil was also putting pressure on marketers by weakening their purchasing power.
“Crude oil is important in refining petroleum products; once it goes up, the prices of petroleum products will also go up. We are gearing towards that. The only problem is that it is also giving us pressure in terms of our purchasing power because too much naira is now pursuing a few litres of petroleum products,” Ukadike added.
