Oil Marketers Call for Dedollarisation of Downstream Supply Chain

In a media forum organized by the Major Energies Marketers Association of Nigeria (MEMAN), the group called for the dedollarisation of the downstream supply chain in Nigeria’s oil industry.

The forum, held in Lagos, highlighted the challenges faced by marketers due to the complexities of the foreign exchange market and the impact of dollarisation on the industry.

Clement Isong, the Executive Secretary of MEMAN, shared the association’s concerns about the sustainability, efficiency, and affordability of energy for Nigerians.

He emphasized the need for a shift to energy transition, particularly into the gas space. Isong also pointed out that the government’s policy of allowing the Nigerian Ports Authority (NPA) and the Nigerian Maritime Administration and Safety Agency (NIMASA) to charge in dollars has weakened the industry and discouraged investment.

The fluctuating dollar movement and the unpredictability of the exchange rate have further complicated the situation, pushing up the cost of the pump price.

The cost of a litre of fuel has increased from ₦4.85 in 2023 to ₦11.83 today, while the cost of ship-to-ship products offload has risen from ₦14.54 to ₦28.44 due to the dollar’s current exchange rate of ₦1,600.

As a result, the association has been advocating for a shift to gas as an alternative source of energy.

Isong advised depot operators and filling stations to consider moving to Compressed Natural Gas and other renewable energy sources like solar in order to break even and operate more efficiently.

Despite the challenges, the government has continued to provide intervention initiatives to support the industry.

President Bola Tinubu, in July 2023, promised to monitor the effects of the exchange rate and inflation on gasoline prices and intervene when necessary.

Efforts are also being made to drive the adoption of Liquified Petroleum Gas (LPG) and Compressed Natural Gas (CNG) in both the industrial and automotive sectors.

The government has been encouraging investment in this space, but more infrastructure deployment is needed to further boost the adoption process.

The call for dedollarisation of the downstream supply chain by oil marketers is a step towards addressing the challenges faced by the Nigerian oil industry.

It remains to be seen how the government and other stakeholders will respond to this call and what measures will be taken to ensure the sustainability, efficiency, and affordability of energy for Nigerians.