Foreign exchange volatility impairs petrol imports bid

 

The foreign exchange volatility is a major factor affecting marketers’ efforts to join the Nigerian National Petroleum Company Limited (NNPC) in the importation of the product into the country.

The controversy over whether petrol subsidy is really gone has reemerged as marketers continue to stay on the sidelines after some brought in cargoes following the implementation of reforms by the current administration.

Following the removal of subsidy and liberalisation of the FX market last year, over 50 oil marketers were licenced to supply petroleum products in accordance with Petroleum Industry Act (PIA).

Some of the oil marketers disclosed that they have stopped importing the product, citing the inability to sell at market-driven prices as the NNPC has left the pump price unchanged for months.

“For more than four months now, no other importer has brought in the product except the NNPC Ltd,” one of the marketers said. ‘’The pump price of petrol had been left unchanged by the national oil company because the government was subsidising the product and it will be difficult to break even if any marketer brings in the product.”

Another oil marketer narrated how foreign exchange volatility has left marketers vulnerable to financial losses. “Ardova tried once after the subsidy was removed but didn’t bring in more than one vessel,” he said.

Tunji Oyebanji, chief executive officer of 11 Plc (formerly Mobil Oil Nigeria Plc), said having the NNPC as the only company supplying petrol into the country was promoting unhealthy competition, which was prohibited by the Petroleum Industry Act.

“Prices of petrol are still not reflective of true market dynamics. There should be healthy competition throughout the value chain, and all these have been impossible due to the NNPCL monopoly,” he said.