MOMAN Blames High Foreign Exchange Rate For Fuel Price Increase


Nigeria’s high foreign exchange rate has compounded the rise in fuel prices as importers of petroleum products are battling with access to dollar for their activities, the Executive Secretary of Major Oil Marketers Association of Nigeria, Clement Isong, has said.

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The MOMAN boss on Tuesday told TVC News Business Nigeria, that marketers needed access to forex to make the prices largely competitive.

The Executive Secretary said this during an analysis on MOMAN’s perspective on pricing template, deregulation initiatives in the oil and gas sector.

The programme was monitored by THE WHISTLER.

Isong said that marketers major challenge has always been getting access to foreign exchange for importation of petroleum products.

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He said, “In my sector, we mainly do not have access to foreign exchange at the I&E window rate of N387 per dollar.

“So we are unable to import PMS as price modulation has used the exchange rate to determine what the landing price should be and that is why basically only NNPC continues to import”

Nigeria’s Minister of State for Petroleum Timipre Sylva, had announced government’s decision to adopt a price modulation mechanism which reflects the price adjustment of petroleum products.

Nigeria’s new deregulated price regime reflects the price adjustment of petroleum product o
in the international market which had been hit by the Covid-19 pandemic.

Africa’s largest crude exporter also adopted a “fair pricing scheme” as succor for its over 200 million population.

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But with gradual recovery of the global market, the demands for the product has been on the rise.

Oil prices have since average $40 to $45 dollar a barrel and has reflected in the pump prices of Africa’s most populous country.

In August and September the Petroleum Product Marketing Company fixed the ex- depot price of Premium Motor Spirit at N138.62 and N151.56 per litre respectively while pump price of fuel currently stands at about N161 per liter.

While citing the country’s forex shortage, Isong said that with exchange rate around N387 per dollar, Nigeria will see price of fuel remaining at N160 per litre

He pointed out that there are two main drivers of price in the importation of fuel into Nigeria. The drivers are the cost of crude oil outside Nigeria and the country’s exchange rate.

Isong said, “The country is broke, it really cannot afford to pay for subsidy. It is unfortunate that it has come at this time but I really do not think the country has a choice.”

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Oil rich Nigeria had in 2019 spent over N1trn on subsidy, which the state owned petroleum corporation said was “elitist,” while it announced removal earlier this year.

Isong stated that competition would eventually play huge role to curb the rise in fuel prices, as “marketers are pushed to compete with each other.”

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