Concerns loom over the current state of the downstream sector in the country, as operators confirm that the ongoing foreign exchange crisis and difficulties within the local distribution channel are causing a surge in the cost of Premium Motor Spirit commonly known as petrol.
Managing Director of Rainoil Logistics, Dr. Jude Nwaulune, disclosed that the estimated landing cost of the product currently stands at approximately N580 per litre towards the Calabar region.
He made this announcement during a panel session at the just confused Oil Trading and Logistics Africa Week 2023 in Lagos, under the theme ‘Africa Fuels Update: Overview of Trends and Market Developments.’
Nwaulune stated, “The realities have been alluded to from the FX perspective, primarily sourcing from the parallel market, which most marketers are compelled to do. Reviewing our operational bases, the landing cost of PMS in Lagos is around N565 per litre. As we move towards the Oghara region, it’s approximately N570 per litre, and towards the Calabar area, it’s similarly within the range of N580 per litr
Rainoil’s boss highlighted that independent marketers are facing challenges in breaking even in their operations since the removal of fuel subsidies and the emergence of the foreign exchange crisis.
At present, most independents are struggling to afford the product, resulting in a growing scarcity. Along the supply chain, the cost of transportation has also increased, with diesel selling at around N1, 000 per litre.
Discussing transition towards cleaner energy, Nwaulune called for increased investments in Compressed Natural Gas and other cleaner fuels, as the country has adopted gas as its transitional fuel. Given the substantial proven gas reserves, he suggested that stakeholders should make more investments to catalyze the economy.
He urged the government to address the numerous challenges facing the country, including insecurity, asset vandalism, and community unrest. While the Petroleum Industry Bill is addressing some of these issues, the sanctity of contracts remains a concern, impeding potential investors.
He also called on the government to eliminate all local transactions priced in US dollars, stating that this move would facilitate industry growth, considering the current economic indicators of the country.