Petroleum marketers may require about $1.84 billion every month to purchase petrol, diesel and aviation fuel from Dangote Petroleum Refinery following the company’s decision to price refined petroleum products in dollars, a development analysts warned could increase pressure on Nigeria’s foreign exchange market, test liquidity position and expose consumers to more frequent fuel price fluctuations.
With the depot price of premium motor spirit (PMS) already increasing by over N100 per litre, the decision may also leave consumers with significant strain.
It is expected to stress-test the liquidity position of the foreign exchange (FX) and how fast it can respond to short-notice demand by largely fragmented marketers.
But with the marketers’ sourced dollar going directly to the local refinery in the new pseudo-import arrangement, the market is likely not going to witness significant FX leakage or loss through the new deal.
Based on current national consumption and supply volumes, marketers would need an estimated $60.7 million daily to procure products from the refinery. PMS alone accounts for the largest share of the demand, requiring about $36.9 million daily or roughly $1.1 billion monthly, at the refinery’s new gantry price of $0.779 per litre.
For automotive gas oil (diesel), priced at $1.087 per litre, marketers would require approximately $20.4 million daily, translating to about $633.5 million monthly.
As for aviation turbine kerosene (ATK), which is priced at $0.942 per litre, marketers would require another $3.4 million daily or around $105.1 million monthly, based on an average daily supply of 3.6 million litres.
Following the development, PMS price increased by about N100, rising N1,137 to N1,250 per litre in some depots, representing an increase of N113.
Sahara, AIPEC and African Terminal have reportedly increased their petrol loading prices from N1,090 to N1,120 per litre.
Diesel prices also climbed, with ex-depot prices rising to as high as N1,650 per litre, representing a spike of up to N150 per litre at some depots.
Coming a few days after the Federal Government called for a drop in petrol prices, pump prices have already witnessed about a N100 increase even as crude oil prices climbed to $85 per barrel or about $10 within the first two days of the week.
Dangote Petroleum Refinery had written to marketers announcing the transition of all gantry lifting payment currencies from the naira to the dollar effective July 13.
Consequently, any previously issued naira-invoice deals were voided, and payments against them ceased.
The notice seen by The Guardian announced new USD rates for Gantry (LTR), including PMS quoted at $0.779, AGO at $1.087 and ATK at $0.942. Coastal PMS pricing is $1,044.62 per metric tonne.
The refinery said the currency shift does not apply to LPG transactions, which will retain their existing payment arrangement. Customers were advised to adhere to the new guidelines for future dealings.
