Oil companies in Nigeria have claimed that the present gas prices are not in line with the market and that another price hike would allow them to turn a profit.
This follows two price hikes in as many months for gasoline in Nigeria, from N189 to N500 and most recently N537 to N617.
Meanwhile, Tunji Oyebanji, CEO of 11 Plc and former chairman of the Major Oil Marketers Association of Nigeria, told The in an interview that oil prices will reflect market realities.
He claims that this is the standard in other nearby African countries where gasoline is imported.
There is still risk if pricing in surrounding nations are more reflective of actual market conditions than those in the United States. We won’t have a clear picture of the problem until everyone begins importing at the new exchange rate and sees the resulting pricing and can compare it to their neighbors.
“The difference probably won’t be that big,” Oyebanji said.
He also mentioned that fair competition was good for the downstream industry.
“Price changes are inevitable, so get used to them. The price could rise now, yes. The currency rate is another factor that could lead to a decline. The good news is that there would be stores virtually everywhere, so if yours is more expensive than the gas stations in the area, you would have to lower your rates to compete. He stated, “The market would benefit from the increased competition that would result.”
After the meeting with labor, the Federal Government is expected to provide a road map.
Labor has announced that it will give the administration two months to develop a plan. We are also waiting for the plan on how to expand the use of CNG.
Oyebanji also expressed concern that smuggling would resume if market forces were not permitted to determine prices.
Wouldn’t this lead to a resumption of tanker rerouting to hostile nations again? He pondered, “What else could account for this level of disparity in these June figures” (the pricing difference between us and our neighbors).
To fund their import operations, Oyebanji said depot owners were turning to both domestic and international lenders.
It’s not like we’re merely obtaining permission to bring in shipments. We have the necessary licenses, but no longer see imports as a worthwhile endeavor. Everyone is testing us out at the moment. Money will be raised and borrowed from foreign sources by some, while local banks will be used by others. There wouldn’t be simply three importers involved. Many businesses are scrambling to get their products ready for shipment. But don’t expect us to be shouting it from the rooftops in the press,” he promised.
In addition, an unnamed source at a Lagos facility suggested that the number of licensed imports was growing.
He also warned that if full deregulation was not permitted to take place, smuggling or diversion of products to neighboring nations would continue.
Who supplies nations like Ghana, Benin, and Cameroon with goods? He questioned, “Is it not from Nigeria?”
Product pricing will be determined by underlying market factors. In addition, the 7.5% VAT is currently delaying several AGO (diesel) vessels at Customs. Marketers’ expenses would first be factored into the landing cost, and then into the retail price of the product. He continued, “And the marketers would have to throw in some profit, since they need to turn a profit.”
In nations like Mali and Togo, however, the price might reach N1,100. After Nigeria eliminated subsidies from petrol, local fuel vendors and commercial drivers in Cameroon, Benin, and Togo reportedly saw their companies collapse due to inadequate supply and high pricing.
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