Market News
Naira-for-crude: Marketers fear price hike as FG suspends sale to Dangote
•IPMAN slams depot owners for stockpiling product, FG, Dangote resume talks today
Following the Dangote Petroleum Refinery’s suspension of the sale of petroleum products in naira, some filling stations have started stockpiling Premium Motor Spirit, otherwise known as petrol, The PUNCH reports.
The retailers are storing the product to ensure they have enough to sell at a higher rate, having projected that the price of petrol would go up soon as a result of the failure of the Federal Government to continue the sale of crude oil to the Dangote refinery in the local currency.
However, the Independent Petroleum Marketers Association of Nigeria warned these retailers to stop panic buying as they may run into heavy losses.
Last week, the Dangote refinery announced that it had temporarily halted the sale of petroleum products in naira as the naira-for-crude talks between it and NNPCL appeared to have failed.
The 650,000 barrels per day capacity refinery lamented that there was a mismatch between its sales proceeds and its crude oil purchase obligations, which it said are currently denominated in US dollars.
“Dear valued customers, we wish to inform you that the Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in naira. This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in US dollars.
“To date, our sales of petroleum products in naira have exceeded the value of naira-denominated crude we have received. As a result, we must temporarily adjust our sales currency to align with our crude procurement currency,” the firm announced.
Immediately after the announcement, the cost of loading petrol at private depots in Lagos jumped to about N900/litre. It was less than N850/litre before the announcement.
In an interview with our correspondent on Sunday, the National Publicity Secretary of IPMAN, Chinedu Ukadike, said depot owners were profiteering even as some owners of filling stations were in a rush to stockpile fuel.
According to him, the demand for PMS has risen since Wednesday, when Dangote made the announcement. As a result, depot owners were said to have raised their prices to make more profit.
It was observed that players in the downstream petroleum sector have been left to continue speculating on the prices of petroleum products as the Federal Government had kept mute since the announcement made by the Dangote refinery.
Five days after the announcement, the refinery has yet to tell marketers how the dealers will buy PMS going forward.
Private depot owners wasted no time in jerking up their prices in anticipation of a possible hike in petrol prices. Although owners of filling stations have yet to increase their prices, they are already buying to sell for more gains when the price goes up later.
But Ukadike condemned depot owners for profiteering from the impasse between the Federal Government and the Dangote refinery, saying that is not good for the economy.
He warned marketers not to panic-buy because the Dangote refinery may crash the price.
“Some depot owners are already increasing the price. But we are also asking our marketers not to panic-buy. Because definitely when the Dangote refinery comes back and reverses the price, it will be a huge loss for these marketers. Depot owners are using this opportunity to profiteer. This is not good for the economy.
“Some marketers are also stockpiling PMS in a bid to increase the price based on the suspension of naira sales by the Dangote refinery. They speculate that the price will go higher and they will make more money from the fuel they are buying now. It may not be so. This issue will be resolved,” Ukadike stated.
He warned all marketers against buying large volumes of petrol to avoid running into debt.
“We, the independent marketers, are asking our members not to buy so much goods because when they buy so much volume of fuel at a higher rate from the depot owners, at the end of the day, it might result in losing a lot of capital.
“Dangote may crash the price and most of them with high volumes of PMS will run into problems. So, all marketers should be careful to avoid losses,” he advised.
