Petroleum Marketers Deny Pump Price Adjustment Despite Exchange Rate Improvement

Petroleum product marketers and other operators in the downstream sector have denied rumors of a downward adjustment in the pump price of petrol at depot facilities.

Despite the recent improvement in the exchange rate, prices at petroleum outlets remain unchanged, and depot prices have not been adjusted.

According to sources close to depot owners, the fluctuating exchange rate and high costs of hiring vessels to move products to depot facilities and freight and port charges (paid in dollars) are factors that have prevented any price adjustments.

The national president of the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, and the Independent Petroleum Marketers Association of Nigeria (IPMAN) BOT treasurer, Elder Chinedu Okoronkwo, both denied the speculations.

A source around Major Energy Marketers Association of Nigeria (MEMAN) also denied any price adjustments.

An oil and gas expert, Emmanuel Iheanacho, chairman of Integrated Oil and Gas Ltd, explained that the improvement in the value of the naira would not lead to an automatic reduction of petrol pump prices.

He noted that the pump price is not fully determined by market mechanisms and is currently dictated by the government or the Nigerian National Petroleum Company Limited (NNPC) fiat.

Iheanacho emphasized that the disparity between the petrol product landing cost and the pump selling price constitutes the apparent subsidy, which would continue until the market is fully deregulated and liberalized.

He also pointed out that the pump price is stagnant because it is not responsive to market factors such as exchange rate parities.

The oil expert mentioned other relevant factors that would impact pricing responsiveness, including market condition, supply volumes dictated by demand, and equal availability of forex to all downstream traders.

He concluded that these factors interact in the trade to cause up and down movements in the pump price of petrol.

Despite the recent improvement in the exchange rate, petroleum marketers and other operators in the downstream sector have denied any downward adjustment in the pump price of petrol at depot facilities.

The pump price remains unchanged, and factors such as the fluctuating exchange rate and high costs of moving products and freight and port charges (paid in dollars) have prevented any price adjustments.