Dollar vs. looming fuel scarcity

It is predicted that the country may yet face another round of fuel scarcity.  OLUWAGBENGA BANKOLE examines the role consistent depreciation of the naira against the dollar and the scarcity of the currency on the impending fuel scarcity.

Unless there is adequate measure put in place by Federal Government, undoubtedly, fuel scarcity is expected to return to filling stations in the nooks and crannies of the country. No thanks to difficulty in getting dollar for importation of petrol which has become increasingly an herculean task for marketers and they have resorted to approaching the parallel market.

The scarcity of foreign exchange, especially the dollar, is currently threatening import contracts for Premium Motor Spirit (otherwise called petrol).

Marketers of petroleum products are now finding it difficult to get dollars to finance import transactions; even with the naira equivalent readily available.

It was gathered that some marketers who recently had their credit lines reopened by their banks after a long wait, are also having challenges getting adequate dollar conversions.

The inability of marketers to access foreign exchange from banks is said to be frustrating the importation of petroleum products, especially Premium Motor Spirit (PMS) popularly known as petrol, which is in very high demand in the county.

The delay by Nigerian National Petroleum Corporation (NNPC) to sign pending agreements for the exchange of crude oil for products as well as oil marketers inability to access the Dollar have set the nation on another path to fuel scarcity.

A report revealed that the NNPC was trying to sign additional long-term contracts to cover well beyond the 210,000 bpd of oil that was exchanged in the past. This is coming after NNPC signed deals last year with refiners Total, Varo Energy, Cepsa and ENI to exchange oil directly for petrol and other products beginning in February.

Litasco, Noble and Total also secured “spot” swap contracts with NNPC via local joint ventures in February and March, including Sahara Energy Limited that also won spot swap deals in March.

Some trading houses and refineries were said to have met with NNPC officials in Abuja and London over the past month, promising that they can quickly move vessels with petrol to Nigeria. But negotiations are taking longer than expected, leaving a gap in imports.

Although the Independent Petroleum Marketers of Nigeria (IPMAN) warned last week of the fresh nationwide fuel scarcity following what it calls profiteering by private depot owners.

IPMAN said that the private depot owners are alleged to be selling Premium Motor Spirit at N98 per litre.

The Vice President of IPMAN, Alhaji Abubakar Dakingari wants the Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu to investigate why the private depot owners are selling far above the official price.

He advised the Nigeria National Petroleum Corporation (NNPC) to increase supply as inadequate supply is the reason why the private depot owners are exploiting other Nigerians.

Dankigari said that it is impossible for the independent marketers to buy a product for N98 per litre and sell it for N86.50 per litre.

Speaking exclusively with TOTALNEWS247, the Managing Director of Petrocam Trading Limited Mr. Patrick Ilo said that the current dollar rate is having negative effect importation of fuel.

Ilo who said that PPPRA template is negative to marketers and positive to government, noted that the scarcities of dollars have paralysed fuel importation.

“It is major oil marketers that have access to dollars because government is assisting them in this regard. If you go around you will discover that the prices of fuel by independent marketers is higher because of the scarcity of dollar. To access foreign exchange from CBN is practically impossible,” he said.

According to him the N86 or N86.50 regulated pump price is only within Lagos and Abuja. Outside Lagos and Abuja the price is over N100.

While speaking on the way from the ever ending fuel scarcity, Ilo said; “the way out is deregulation. If there is deregulation petroleum products will not be expensive. The maximum you will buy PMS is 105 and after a bit of time because of supply the price will come down. This is the right time for government to deregulate because the price of oil is down globally.”