Nigeria is bracing for potentially more economic challenges as industry experts predict an upcoming increase in the pump price of petrol, with estimates ranging between N680 and N720 per litre.
In light of the prevailing exchange rate dynamics, petroleum marketers are projecting that the price of petrol could escalate to a range of N680 to N720 per litre in the coming weeks. This projection hinges on the performance of the US dollar against the Nigerian naira, which has been fluctuating between N910 and N950 in the parallel market.
Marketers are highlighting the impact of the scarcity of foreign exchange on their ability to import petroleum products. The ongoing struggle to access foreign exchange is reportedly causing delays in import plans, adding to the challenges of maintaining stable fuel prices.
The depreciation of the naira against the US dollar has been particularly pronounced since the decision to streamline exchange rates. The naira has crossed the threshold of N900 to a dollar, reaching N950 by the end of last week.
Chief Chinedu Ukadike, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria (IPMAN), emphasized that the price of petrol is now closely linked to forex fluctuations. Ukadike noted that the demand for forex extends beyond the petroleum industry, affecting various import-dependent sectors.
Ukadike explained, “As the naira weakens against the dollar, there are ripple effects. The supply and demand for foreign exchange play a crucial role. It’s important to recognize that other industries relying on forex are also grappling with these challenges.”
Stressing the mathematical correlation between the dollar’s ascent and fuel prices, Ukadike highlighted that petroleum products are significantly influenced by dollar values. He clarified that petroleum marketers are still sourcing dollars from the parallel market due to issues with the liquidity of the Central Bank’s official Importers and Exporters window.
“The current trajectory suggests that if the exchange rate remains between N910 and N950 per dollar, consumers should prepare for a price range of N680 to N720 per litre. However, if the dollar climbs to N1,000, the price could reach N750 per litre,” Ukadike cautioned.
Ukadike also discussed the role of the Nigerian National Petroleum Company Limited as the primary importer of petrol, although another importer, Emadeb, recently entered the market. He highlighted the complexities faced by importers due to the depreciating naira and the dollar-denominated nature of petroleum imports.
Ukadike concluded by indicating that consumers can anticipate price adjustments once the Nigerian National Petroleum Company Limited implements changes at its outlets, effectively triggering similar actions among other marketers.
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