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Let us be very clear, as at today there is subsidy in Premium Motor Spirit ( PMS.)or petrol. Platts gasoline traded at 960 dollars per Metric Ton as of the 15th of August, 2023. With exchange rates at N950 to the dollars, FOB prices offshore Lome should be about N680 per liter. With Nigerian National Petroleum Company (NNPC )Limited’s PFI prices still around N523 per liter, there is technically a subsidy of about N150 per liter as at today.
NNPC wants marketers to start importing Premium Motor Spirit( PMS)or petrol and fix their own prices. The market is deregulated. Marketers must be seen to be the ones fixing prices on a regular basis just as it is done with diesel. This way the spotlight is on marketers and it’s easier for the public to accept
When the government removed the subsidy, NNPC announced new prices and marketers followed. When the price of crude jumped, again NNPC increased prices and marketers followed. Because of this pattern NNPC, indeed the government has been made to look like the ones increasing prices and not market forces. That is why it shall be difficult for NNPC to again increase prices now. It makes both NNPC and Government look bad
The conversations we should be having now and the push we should be making now is how to get marketers to start importing by dealing with the big elephant in the room: Foreign Exchange( FX )availability. By the calculation of some industry stakeholders, the industry needs about $35m daily to meet our daily PMS import demand. The government needs to ring-fence this amount regardless of the rate ( even if it’s N950 to an S1 ). Marketers need certainty on the quantity of dollars and the exchange rate and availability. We import, and we firmly know what our landed cost is. We fix the price. We sell. This way we take the lead and take the spotlight away from NNPC and Government.
Marketers are business people and not gamblers. Nobody wants to import PMS believing his exchange rate is N750 and when it’s time to pay suppliers rates have moved to 950 and wiping away whatever little margins he may have made on the import. That’s why the exchange rate needs to be fixed and firm regardless of what the rate is.
