Subsidy removal: Oil marketers urge FG to provide FX at official rate
Stakeholders in the downstream sector have called on the Federal Government to provide foreign exchange at the Central Bank of Nigeria’s rate to enable petroleum importation.
The appeal was made during a virtual online workshop with the theme “Deregulation of the Nigerian downstream sector: The day after,” organised by the Nigerian Petroleum Downstream Industry in collaboration with the African Refiners and Distributors Association in Lagos.
National President, Independent Petroleum Marketers Association of Nigeria, Chinedu Okoronkwo, who was represented by National Operations Controller, IPMAN, Mike Osatuyi, explained that with the proposed removal of fuel subsidies by the government, pump price would likely drop to around N500 if the government encourages the CBN to provide forex to marketers at the official rate.
He added that marketers were in full support of FG’s plan to fully deregulate the downstream sector.
Osatuyi also urged the government to channel savings from subsidies towards provision of palliatives in form of public transportation, freight of agricultural produce and ensure transparent and effective communication.
He also called on the government to improve access to foreign exchange, trade finance, guarantee strategic stock, and provide access to crude oil for refineries ahead of the planned total removal of petrol subsidies.
He also charged the government to be alert and sensitive to resentment of Nigerians after petrol subsidies must have been removed.
Meanwhile, the Executive Secretary of the Major Oil Marketers Association of Nigeria, Clement Isong, said petrol could sell as low as N300 per litre if marketers get dollars at CBN rates.
The gap between the official and black market rates depends on demand and supply, and once the government decides to set an official exchange rate, everyone automatically becomes spectators because the government is not generating enough dollars.
“Most of the dollars are in the hands of private individuals due to scarcity. That is why the price of dollar is still too high. If the government can generate enough dollars to go round, those hoarding it will have no choice but to bring them out, and prices will drop.”
According to him, if marketers buy dollars at government rates, petrol will sell for about N300 plus at the pump, but if they rely on the parallel market for forex, petrol price will be around N600 per litre.
“The next government must manage the forex rates better in order to gain market confidence, and the market includes you and me – the masses, who make use of dollars every day,” he said.
He also advised FG to implement products supply liberalisation policy.
“NNPCL should not be the only supplier, and licenses should be given to those who are willing to supply at good rates in order to avoid hoarding,” he said.
The Chairman of MOMAN, Olumide Adeosun noted that the burden of petrol subsidies did not rest only on the government, but also on the masses.
“Oil marketers make a lot of investment in the downstream sector and the people should know that the burden of subsidy is not just on the government but also on us. And for every second it is delayed; the burden gets increased. We stand with the government on the delay; however, we need to plan now.
“We must not lose focus during the pause period. To what extent do we need to get involved in managing the transition plan, else, we would see that the waiting period would elapse without anything being put on ground for the transition,” Adeosun said.
