Depots deserted as petrol landing cost hits N720/litre

Oil marketers reported yesterday that the landing cost of Premium Motor Spirit, commonly referred to as petrol, has increased to N720/litre due to recent fluctuations in the value of the Nigerian Naira against the United States Dollar.

The PUNCH reports that retailers of petroleum products have said that filling stations are closing at an alarming rate because of the tough economic climate.

They predicted that this would cause a nationwide fuel shortage in the following months.

It was also reported that the price of PMS upon arrival in Nigeria had risen to N720 per litre from N651 in August.

The National President of NOGASA, Benneth Korie, reported that many depots are currently dry or out of stock during yesterday’s meeting of NOGASA’s National Executive Council in Abuja.

He said, “Depot owners are so terribly affected by the increasing cost of crude oil and exchange rate 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. It is now beyond dispute that many storage facilities have run dry or are completely out of supply.

In addition, he said, “Worst hit are filling stations whose owners find it extremely difficult to secure funds to procure products for their retail outlets. Major corporations and small businesses alike are suffering greatly.

“As of right now, filling stations are closing down in large numbers on a daily basis and dealers are going out of business, with many more on the verge of bankruptcy due to their inability to secure funds to facilitate orders for their stations.”

The government, according to Korie, must immediately come to the aid of the industry in order to save it from a colossal collapse, which would result in a more devastating blow to the economy at large.

The landing price of gasoline has also increased, from N651 per litre in August to N720 per litre now.

During an interview with this paper, Patrick Ilo, CEO of PETROCAM Trading (Nig) Ltd., said that the price of the 52,000 metric tonnes of petrol that his company imported on Tuesday was already N720/litre without subsidies.

He reasoned that if the federal government had truly stopped subsidising the product, the pump price in Lagos State would be closer to N729 per litre rather than the current N720.

“I’ve brought my ship in here before, but this is the second time. I brought it inside, but now I’m stuck. I can’t sell it because I landed my own product at N720. And if you add transport from depot to station, the value today should be N729/litre at the pump.”

He stated that the Federal Government was still subsidising petrol through the Nigerian National Petroleum Company Limited and that the increase in price was due to the high foreign exchange rate.

The foreign exchange rate of the Central Bank of Nigeria as of Wednesday was around N766/$1, while it hovered around N990/$ at the parallel market.

His words.PETROCAM is able to sell its wares in Nigeria because the company possesses an import licence. I’m going to say it out loud: I borrowed somewhere around sixty something million dollars to import 52,000 metric tonnes of PMS today.

Yet, there’s nothing I can do to make a sale. Why? Because NNPC is selling at such a low price. They are subsidising the NNPC, in my mind. Market prices are being artificially lowered by NNPC. I also don’t hold the government responsible. We can only hope for economic growth if our government is secure.

The NNPC is currently subsidising these products,” Ilo continued. And by “substantial,” I mean more than N100 per litre in subsidies. Because I just landed my own product at N720, and I can help you sell today if you need to. So, what’s your take on it? You take into account factors like “how much is diesel?”