The Independent Petroleum Marketers Association of Nigeria (IPMAN) has expressed concerns over the current landing cost of Premium Motor Spirit (PMS), commonly known as petrol, highlighting the challenges faced by marketers in importing the essential commodity.
Zarama Mustapha, IPMAN’s National Operations Controller, stated on Channels Television’s Sunrise Daily programme on Thursday that the landing cost of PMS has surged to over N1,200 per litre. This figure excludes the margins for marketers, transportation, and other logistics.
“Right now, the landing cost of PMS is over N1,200, without the margin of the marketers, transportation and other logistics,” Mustapha said.
Mustapha further pointed out that the Nigerian National Petroleum Company (NNPC) Limited sells petrol to marketers at approximately N565 per litre.
“That means there is a subsidy of almost N600 to N700 as of now,” he noted, adding that despite official statements, the reality on the ground indicates an under-recovery situation.
The call for the reinstatement of petrol subsidies was a significant demand from the #EndBadGovernance protesters, who rallied last week against rising hunger and food inflation in Nigeria.
However, President Bola Tinubu, in a nationwide address on Sunday, defended the removal of fuel subsidies, asserting that it was a painful but necessary decision to remove economic impediments and facilitate national progress.
Mustapha acknowledged the legitimacy of the protesters’ demands but questioned the government’s ability to meet them.
“Their demands are cogent and in consistent with the realities on the ground looking at the economic situation of the country. They have every right to go and demand that. But the other side of it is that the government can do what it can afford,” Mustapha said.
He cautioned that reverting to lower petrol prices might be financially burdensome for the government.
“If you say we should revert to N200 or N250, can the government afford that much of a burden?” he asked.
Nigeria continues to face severe energy challenges, with all state-owned refineries non-operational and a heavy reliance on imported refined petroleum products.
Fuel prices have tripled since the removal of the subsidy in May 2023, escalating from around N200 per litre to about N700 per litre, exacerbating the struggles of citizens dependent on petrol for transportation and power generation.
The government’s unification of forex windows has led to a sharp depreciation of the naira, which has plunged from $1/N700 to over $1/N1600 at the parallel market, contributing to skyrocketing prices of food and other basic commodities.
Mustapha attributed the persistent fuel queues and the near-collapse of independent marketers to policy inconsistency and forex volatility.
“Looking at the need to be in business in the deregulation era, more than 50 or 60% of our members are almost out of business because of the capital involved,” he said.
He explained that the capital required to purchase a truck of petrol has multiplied five to six times since the subsidy removal.
Regarding President Tinubu’s directive for NNPC to sell crude oil to Dangote Refinery and modular refineries in naira, Mustapha commented, “It’s just the currency but whatever they are going to sell in naira is going to be calculated based on the FX rate.”
He noted that this move could alleviate some pressure on the naira by reducing the demand for dollars, potentially providing some appreciation to the currency.