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Home » FX crisis, distribution hiccups driving up petrol price

FX crisis, distribution hiccups driving up petrol price

The ongoing foreign exchange crisis (FX) and difficulties in the local distribution channel are pushing up the cost of Premium Motor Spirit (PMS), also known as petrol, industry operators say.

Jude Nwaulune, Managing Director of Rainoil Logistics said the landing cost of the product according to the company’s current estimation is about N580 towards the Calabar end.

He made this known on Tuesday at the ongoing Oil Trading and Logistics (OTL) Africa Week 2023 in Lagos.

Nwaulune said: “The realities have been alluded here from the FX point of view, basically sourcing from the parallel market, which most marketers are enforced to.

“Taking a look at our operational bases, landing PMS in Lagos is around N565. We take it towards Oghara end, it’s about N570 and towards the Calabar end, it’s equally within the N580 range.”

Read also: How Nigeria plans to source $10bn to fix FX crisis

Rainoil’s boss said that independent marketers are having difficulties breaking even in their operations since the removal of fuel subsidy and the emergence of the foreign exchange crisis.

“You find a situation where it’s unaffordable (to land petrol and distribute it to the pump). In this chain, the independents are beginning to miss from the chain.

“Because the 4,000 litres of PMS that used to be N7.5 million prior to the deregulation is now about N25 million,” he said. “So, it’s huge cost taking it from the depot end to the pump is a whole lot of challenge.”

Earlier in the month, BusinessDay reported that many petroleum product depots have been deserted due to a lack of supplies caused by currency volatility.

Oil marketers indicated that filling stations were closing down in huge numbers on a daily basis because the industry was getting increasingly difficult to maintain. According to them, this could lead to widespread petrol scarcity in the coming months.

Last week, fuel scarcity resurfaced across Nigeria as many oil marketers shut their outlets against motorists and other buyers on the back of an unfavourable working environment.

Long queues were sighted at various retail stations with the product across the nation.

This development made the Nigerian National Petroleum Company (NNPC) Limited release a statement claiming it has fuel to cover for 30 days. It said the scarcity is on the back of reduced depot loadout in Apapa, Lagos over a few days, “and the root cause has since been addressed.”

The state-owned oil company is the sole importer of petrol in Nigeria.

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