Fuel prices may soon jump to N720/litre as marketers bemoan high interest loans, forex fluctuations

There are fears that the prices of fuel products may increase further as irregular foreign exchange rate fluctuations, has left many petroleum product depots vacant.

Consequently, oil marketers, on Thursday, expressed worries, stressing that the rise in the landing price of Premium Motor Spirit, more commonly known as petrol, may risen to N720 per litre.

The National President of Natural Oil and Gas Suppliers Association of Nigeria (NOGASA) Benneth Korie, underlined the severe circumstances many depots are now experiencing while speaking at the National Executive Council meeting of the Natural Oil and Gas Suppliers Association of Nigeria on Thursday in Abuja.

He said that several depots have been almost completely abandoned as their owners struggle to obtain bank loans because of the excessive interest rates.

These problems have been made worse by the volatile foreign exchange markets and the rising cost of the dollar, according to Korie.

He said, “Depot owners are so terribly affected by the increasing cost of crude oil and exchange rate, to the extent that many depots are practically deserted as their owners are unable to secure bank loans to fund their business due to high-interest rates.

“Banks are not willing to guarantee funds release to stakeholders as a result of the difficulty, instability and galloping rates of foreign exchange and high cost of the dollar. Many depots are presently dried up or out of stock, and this is no gainsaying as it is evidently verifiable.”

“Worst hit are filling stations whose owners find it extremely difficult to secure funds to procure products for their retail outlets. Both the independent and major marketers are so terribly affected.

“As of today, filling stations are shutting down in great numbers on a daily basis and dealers are going out of business, with many more on the verge of bankruptcy because of their inability to secure funds to facilitate orders for their stations.”

Earlier during an interview in August, the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, explained that the price of petrol was now driven by the fluctuations in forex, hence Nigerians should expect a hike soon.

Asked whether oil marketers were considering an increase in petrol price, he replied, “Once there is a slack in the naira against the dollar, there is going to be an effect. The demand and supply of forex is a key factor. We should also understand that it is not only petroleum products that use forex.

“Other manufacturers who import one thing or the other are also searching for dollars. So, the surge for dollars has continued to increase. So now that the dollar is hitting N910 to N940, and approaching N1,000, you should expect to buy PMS at the rate of N750/litre.

“It is simple mathematics, once the dollar is going up, have it in mind that the prices of petroleum products would definitely increase because the products are dollar-driven.”