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Minister of State for Petroleum Resources, Ibe Kachikwu, and the Group Managing Director of the NNPC, Maikantu Baru held a closed door meeting with President Muhammadu Buhari on Monday, 5th 2016.
The meeting came after the marketers expressed support over the decision reached at a gathering of former Group Managing Directors of the Nigerian National Petroleum Corporation (NNPC) on the removal of the price cap on petrol in the country in Abuja on Saturday.
NNPC’s present and past GMDs, as well as the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, at the end of their one-day meeting noted that the N145 per litre fuel price did not reflect the price-determining components of the commodity and the fluctuations of the foreign exchange rate.
Hence, Major Oil Marketers Association of Nigeria suggested N165 per litre as the pump price that will cover the cost of forex required for fuel importation, a source said.
Here are five reasons why President Muhamamdu Buhari may consider hikig the price of fuel soon...
- Fluctuations of the foreign exchange rate
The current fuel price was pegged at N145 Per litre at N280 exchange rate for importers.
The price of fuel in the country had not been re-modulated since last May when it was fixed for N145 per litre against the N280 exchange rate to a dollar then and when the Central bank of Nigeria removed peg on the Currency at June 20, 2016 to allow the naira to float.
The implication of this, the importing of fuel at N280/ US dollar is not feasible as the naira currently floats between 310 – 315 at the inter bank.
- Nigerian Ports Authority (NPA) charges remain uncapped
Another reason why Nigerians should expect new fuel price regime is that despite the capping of fuel price at N145 per litre by the Nigerian National Petroleum Corporation, the
charges at the Nigerian ports remain uncapped as it flow with the new exchage rate policy, which is not sustainable for the oil importers.
- Security Challenges In Oil and Gas Sector
The Saturday's meeting of former Ex-NNPC Boss and Oil marketers reviewed the security challenges threatening Oil & Gas production and damaging the Niger Delta environment and urged the government to engage the various host communities as well as established social and traditional structures to develop an actionable partnership framework toward finding a lasting solution to the present unrest. This singular act that cause scarcity of fuel in the society when oil companies declared majeure on supplies.
- Competition of the Downstream sector
Independent marketers are insisting that if what happened a few months ago can be called liberalization, why peg the price of the product?
Allow market forces determine the price of the product, the marketers have argued.
Marketers have argued that they are struggling to maintain pump price at N145 per liter because of the stiff competition in the downstream oil sector, but stressed that the practice was not sustainable
- Unavailability of foreign currency at the market
Executive Secretary of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMA), Mr.Femi Adewole at the Weekend's meeting said that his members had to source the product from the NNPC because they could not access forex to import it.
Tough decision before President Muhammadu Buhari's led federal government is either to hike the price of fuel, grant forex subsidy to oil importers or maintain status quo. Either ways, the effect will be on every Nigerian.
Related: Buhari Will Not Allow Fuel Price to be Increased Again- NNPC Official
Scarcity of fuel or increase in pump price, which do you go for?
The meeting came after the marketers expressed support over the decision reached at a gathering of former Group Managing Directors of the Nigerian National Petroleum Corporation (NNPC) on the removal of the price cap on petrol in the country in Abuja on Saturday.
NNPC’s present and past GMDs, as well as the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, at the end of their one-day meeting noted that the N145 per litre fuel price did not reflect the price-determining components of the commodity and the fluctuations of the foreign exchange rate.
Hence, Major Oil Marketers Association of Nigeria suggested N165 per litre as the pump price that will cover the cost of forex required for fuel importation, a source said.
Here are five reasons why President Muhamamdu Buhari may consider hikig the price of fuel soon...
- Fluctuations of the foreign exchange rate
The current fuel price was pegged at N145 Per litre at N280 exchange rate for importers.
The price of fuel in the country had not been re-modulated since last May when it was fixed for N145 per litre against the N280 exchange rate to a dollar then and when the Central bank of Nigeria removed peg on the Currency at June 20, 2016 to allow the naira to float.
The implication of this, the importing of fuel at N280/ US dollar is not feasible as the naira currently floats between 310 – 315 at the inter bank.
- Nigerian Ports Authority (NPA) charges remain uncapped
Another reason why Nigerians should expect new fuel price regime is that despite the capping of fuel price at N145 per litre by the Nigerian National Petroleum Corporation, the
charges at the Nigerian ports remain uncapped as it flow with the new exchage rate policy, which is not sustainable for the oil importers.
- Security Challenges In Oil and Gas Sector
The Saturday's meeting of former Ex-NNPC Boss and Oil marketers reviewed the security challenges threatening Oil & Gas production and damaging the Niger Delta environment and urged the government to engage the various host communities as well as established social and traditional structures to develop an actionable partnership framework toward finding a lasting solution to the present unrest. This singular act that cause scarcity of fuel in the society when oil companies declared majeure on supplies.
- Competition of the Downstream sector
Independent marketers are insisting that if what happened a few months ago can be called liberalization, why peg the price of the product?
Allow market forces determine the price of the product, the marketers have argued.
Marketers have argued that they are struggling to maintain pump price at N145 per liter because of the stiff competition in the downstream oil sector, but stressed that the practice was not sustainable
- Unavailability of foreign currency at the market
Executive Secretary of Depot and Petroleum Products Marketers Association of Nigeria (DAPPMA), Mr.Femi Adewole at the Weekend's meeting said that his members had to source the product from the NNPC because they could not access forex to import it.
Tough decision before President Muhammadu Buhari's led federal government is either to hike the price of fuel, grant forex subsidy to oil importers or maintain status quo. Either ways, the effect will be on every Nigerian.
Related: Buhari Will Not Allow Fuel Price to be Increased Again- NNPC Official
Scarcity of fuel or increase in pump price, which do you go for?