Many petroleum product depots across Nigeria are currently deserted due to a lack of products, primarily caused by foreign exchange rate volatility. The landing cost of Premium Motor Spirit (PMS), commonly known as petrol, has surged to N720 per litre, according to oil marketers. This situation is leading to concerns of potential fuel scarcity in the coming months.
Oil dealers also noted that filling stations are closing down daily, making it increasingly challenging to operate the business. The rise in the landing cost of PMS is attributed to fluctuations in the exchange rate, with the cost increasing from N651 per litre in August to the current N720 per litre.
Speaking at the National Executive Council meeting of the Natural Oil and Gas Suppliers Association of Nigeria (NOGASA), the National President, Benneth Korie, highlighted the impact of rising costs on depot owners and filling stations. He stated that many depots are deserted as owners struggle to secure bank loans due to high-interest rates. Banks are reluctant to guarantee funds release due to exchange rate instability and the high cost of the dollar. As a result, filling stations are shutting down, affecting both independent and major marketers.
Korie urged the government to intervene urgently to prevent the industry from collapsing, which would have dire consequences for the overall economy.
The Chief Executive Officer of PETROCAM Trading (Nig) Ltd., Patrick Ilo, also noted the high landing cost and its impact on the industry. He explained that he imported 52,000 metric tonnes of petrol at a landing cost of N720 per litre. He suggested that if the government had truly stopped subsidizing the product, the pump price in Lagos State should be around N729 per litre.
Ilo attributed the price increase to a high foreign exchange rate and suggested that the Nigerian National Petroleum Corporation Limited (NNPC) was still subsidizing petrol. He estimated the subsidy to be more than N100 per litre.
The current exchange rate of the Central Bank of Nigeria is around N766/$1, while it hovers around N990/$ at the parallel market.