Hike in petrol price now inevitable in Nigeria

September 09, 2016 | Commodities & Oilprice, Nigeria

Lagos, Nigeria | – The speculation about possible increase in price of Premium Motor Spirit, PMS, otherwise known as petrol, may hold some substance as the Independent Petroleum Marketers Association of Nigeria, IPMAN, yesterday warned of threat to product availability in the country.

This came as expert blamed marketers of insensitivity to price moderation when government placed a cap on petrol price in May.

But, other operators have argued that the price of petrol was driven by laws of economies, which could not be altered for a long time due to foreign exchange challenges.

Speaking in Lagos, IPMAN National President, Mr. Chinedu Okoronkwo, said: “But I will advice for total deregulation. The price moderation, which is the cap placed is not healthy for the petroleum industry to grow.

“There are people who have the forex to bring product and sell. By so doing, forex will crash. But when the industry is over-protected like ours, the current challenges will be unending. The market force should drive the price.

“If the refineries are working to a capacity of 70 percent, the product will not be less than N130 per litre. We should focus on making the refineries work because by the time you keep on importing, forex challenges will keep on recurring and there would no head way.

“The Nigeria National Petroleum Corporation, NNPC, should ensure that the refineries are working and government should grant all support needed to ensure that they work, so the country can avert all of the turbulence hitting the petroleum sector as well as the economy.

“The best way to do that is for the government to hands off, and sometime coming in to intervene when need arise.”

He, however, urged the federal government to urgently encourage the setting up of modular refineries in the country as a boost to spur up refining of crude product.

“The government should encourage the installation of modular refineries in virtually all local government. F

“or example, Ivory Coast has one refinery which is old and yet it is working and giving them the satisfaction to an extent,” he added.

He noted that the association planned to invest on building a modular refinery to assist refining of the product.

“We had brought some investors to Nigeria. In Kogi, we had been given land to build a modular refinery,” he said.

He further called for a good policy in the sector to drive the needed investment for growth.

Okonkwo said: “The body language of the government must be seen. An enabling environment should be guaranteed and encouraged for investors to harness.”

Marketers to blame

Meanwhile, a renowned Petroleum Economist and President, Nigerian Association for Energy Economics, NAEE, Professor Wumi Iledare, has blamed marketers for misunderstanding the intentions of government when it hiked the price of petrol in May.

He said: “The concept of fixing a price at N145 per litre introduced by government in May this years was actually suppose to be a ‘price feeling’ and not ‘price floor.”