Oil marketers give reasons for fuel price increase

The Major Oil Marketers Association of Nigeria (MOMAN) has disclosed that the exchange rate used to determine the price of Premium Motor Spirit (PMS) is N825/$1.

In a statement released on Wednesday, MOMAN said the NNPC used N630/$1 to decide the pump price in May, but as of July 19, the PMS exchange rate is close to N825 per dollar.

“We can infer from our calculations in May that the Nigerian National Petroleum Company Limited (NNPCL) determined its pump price using an exchange rate of about N630 to the US Dollar, while banks reported an exchange rate of approximately N650 on the Investors and Exporters (I&E) window.

“As of today, the liquid exchange rate is close to N825 to the Dollar. This devaluation adds N100 to the cost of importing a single litre of PMS into the country.

“Consequently, an increase in the pump prices of petrol should be expected,” the statement disclosed.

READ ALSO:Market forces responsible for fuel price hike – NNPC

MOMAN made this known while giving reasons for the recent hike in the fuel price, which rose from N500 per litre to N568 and N617 per litre across different states.

The major oil marketers said 80 per cent of the fuel price consists of foreign exchange and international crude prices, while distribution costs, statutory dues, and margins accounted for 20 per cent.

According to the group, the hike in fuel prices is cost-reflective or driven by market realities. They added that the recent increase was caused by the hike in foreign exchange and PMS prices in the global market.

MOMAN, in the statement, said: “In recent months, the price of PMS has remained relatively stable. On 30 May 2023, Platts reported a price of $827 per metric ton (MT), and on 14 July 2023, it was $859.25 per MT. However, there has been a significant increase in the foreign exchange rate.”

Meanwhile, the major oil marketer advised the government to deploy palliatives to cushion the impact of the increase in fuel prices and also ensure that the proceeds created by the removal of fuel subsidy should be properly invested.

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