Refineries: Experts Hinge Fuel Price Crash On Forex, International Crude Prices
. MEMAN X-rays Fuel Pricing Mechanism
By Sulaimon Salau
International energy expert and indigenous fuel marketers have linked a possible crash in prices of petroleum products in Nigeria to the status of foreign exchange (Forex) and the prices of crude oil at the international market.
The experts, who spoke at the quarterly webinar and engagement with Energy Editors held by the Major Energies Marketers Association of Nigeria (MEMAN), today (Wednesday), believed that the coming on stream of the Port Harcourt and Dangote refineries might not herald a regime of drastic crash in fuel prices as being expected by Nigerians, until there is reduction in crude oil prices at the international market and naira gains at the foreign exchange market.
Vice President, Crude Oil at Argus Media, James Gooder, who spoke on “Market Trends Transparency and Fair Pricing” on petroleum products in Nigeria’s petroleum sector, said, Forex remains a key factor to fuel price reduction in Nigeria.
He opined that the coming on stream of Port Harcourt Refinery to complement Dangote Refinery would guarantee supply in the domestic market and also serve the international market
Gooder said that the production from both refineries and other smaller ones across the country would slightly force the prices down, but it may not be a drastic reduction.
“For prices to drop to about N700 or N800 and below, we need to see a substantial change in the foreign exchange as well as reduction in prices of crude at the international market,” he said.
“The advantage of the production is that it will secure supply. We have Dangote and Port Harcourt Refinery now, while Warri and Kaduna are likely to come soon,” he added.
He stated that products being exported from Dangote refinery can bring more dollars into Nigeria and then offset the exchange rate.
Gooder also stated that the refineries will not be restricted to domestic supply as they are also open to international supply in their quest to yield returns.
He expressed optimism that competition would aid the market, urging the regulatory agencies to strengthen the rules and strictly enforce them.
Despite the challenges, he said there is optimism about the future. “Nigeria’s exchange rate is stabilizing, and crude prices are coming down. These trends are positive for consumers,” Gooder noted
He however, stated that infrastructure investment remains a pressing need, hence the need for collaborative efforts between the government and all stakeholders in the oil and gas industry to address the issues.
“Improving our logistics and infrastructure will not only reduce costs but also enhance energy security,” he maintained.
The Chief Executive Officer of MEMAN, Clement Isong, gave details about the pricing trend and exchange rate movement on imported products.
According to him, the spot price of Premium Motor Spirit (PMS) otherwise known as petrol is currently N976.07, while average price per liter of PMS is N971.14. He put the product cost per metric tonne at N708,39 at foreign exchange rate of N1665.99 to a dollar.
