The full deregulation of the petroleum industry will pile pressure on the country’s foreign exchange supply market as oil marketers rally to boost import of Premium Motor Spirit, experts have said.
Advertisement
The Executive Secretary of the Petroleum Product Pricing Regulatory Agency, Abubakar Saidu, had on Tuesday said marketers are now free to source for the product and fix their prices.
Consequently Africa’s largest exporter will have fuel prices determined by market forces and not international cost of crude oil.
The Major Oil Marketers Association of Nigeria had cited access to foreign exchange and the high cost of forex as the biggest challenge limiting their import activities.
But experts who spoke to THE WHISTLER in separate telephone interviews are of the opinion that the demand for foreign exchange would increase with the deregulation of the oil industry.
A Professor of Economics at the University of Abuja, Oyinlola Olaniyi in an exclusive interview with this Newspaper said the demand for Forex will surge following the new price regime.
He said, “Whether we will have the political will to continue the policy is another matter. The new price regime will boost the influx of investment in oil and gas space.”
He noted that the game changer would be the completion of the Dangote Refinery, other private refineries and state owned refineries which are under renovation.
Nigeria is being positioned to be a net exporter of petroleum products.
But the university Don said the chances of marketers getting easy access to foreign exchange soon are slim with the country’s pilled-up forex backlogs.
The expert said, “In the long run, the amount of Forex used in buying crude oil will be saved and the country can leave it afloat or invest in infrastructure.
“If they get foreign exchange at a higher price, the price of fuel will go up.
“We may pay a higher price, but at least the price that we will pay will not include the foreign exchange cost when more refineries are built.”
The Chief Executive officer of Lagos based Economic Associates, Ayo Teriba, said with shortage of Forex, the government should have made available additional avenues for marketers to have access to foreign exchange prior to the deregulation.
“Those who failed to plan and have reserves for situations like this should determine how to ration (Forex),” he said.
In his comments, a former Director General, Abuja Chamber of Commerce and Industry
Chijioke Ekechukwu, said that there could be further increase in the price of petrol as the exchange rate continue to soar.
He explained that in times like this, any pressure in market force, will have direct impact on consumers.
“If the exchange rate continues to rise, it will have direct impact on the petrol price which will in turn affect the purchasing power of the masses.
“This might not be easy at a time when the common Nigerian is still trying to cope with economic downturn caused by the pandemic.
“We could see the price of fuel rise to as high as N300 per litre, depending on the exchange rate and other cost incurred.
“This is a huge price that we may have to pay, except the government decide to go back to subsidy”.