Marketers groan as dollarisation of oil sector inflicts extra N55.8b pain

The continued dollarisation of operations in the downstream segment of the nation’s petroleum industry is compounding existing hardship in Nigeria and adding extra N55.8 billion on the pump prices of Premium Motor Spirit (PMS), diesel and aviation fuel monthly.

Major Energy Marketers Association of Nigeria (MEMAN), yesterday, said unless the Nigerian National Petroleum Company Limited (NNPCL), Nigerian Ports Authority (NPA) and Nigerian Maritime Administration and Safety Agency (NIMASA) stopped charges in dollar, the volatility in exchange rate would persist.

Between May last year when the exchange rate was about N650 to a dollar and currently when the rate hovers around N1600/$, the charges have increased NPA and NIMASA’s fragment of the pump of petroleum products from N19 to N47 per litre. The difference stands at about N28 per litre.

The Nigerian Midstream and Downstream Petroleum Regulatory Agency (NMDPRA) puts daily consumption of diesel at 14 million litres, while jet fuel hovers below five million litres daily.

The agency put the volume of Premium Motor Spirit (PMS) consumption at 44.3 million litres per day. This brings petroleum products’ consumption in the country, apart from kerosene, to 63.3 million litres daily.

The N28 per litre addition, coming from the dollar/naira disparity on the 63.3 million litres, translates to about N1.8 billion daily and N55.8 billion.

Speaking yesterday at an online media forum, organised by MEMAN, its Executive Secretary, Clement Isong, stated that  ending dollarisation of operations would  strengthen the Naira and halt the inflationary impacts on consumers.

To move products, the marketers pay NNPC, NPA and NIMASA about $40 per metric tonne.

In litre terms, this was only N19.43/litre in 2023. While the dollar charges remained unchanged, the drop in value of the Naira pushed litre cost to N47.73. This is an addition to N28.44 on the pump price.

Isong said the development is weakening the industry and discouraging investment, stressing that the dollarised operations were making the sector unpredictable.

While canvassing efficiency across the supply chain, the MEMAN chief urged depots to transit from diesel to gas, stations to solar and trucks to CNG.

Also speaking, a consultant on Liquefied Petroleum Gas, Femi Fanoiki, who foresees more efforts in the direction of gas by the government, stated that the move would increase investment, especially in local capacity.

Seeking more infrastructure to boost the adoption process, he disclosed that it costs about N400,000 to convert vehicles running on petrol to gas.

Gas and Renewable Energy Specialist at MEMAN, Adelanke Bayo-Adepoju, lauded being to convert one million vehicles to run on gas by 2027.