Marketers warn diesel price may rise from N800 per litre
By Jeph Ajobaju, Chief Copy Editor
Diesel price currently at N800 per litre may rise to N1,500 within the next two weeks, piling more financial pressure on all sectors of the economy, from break bakers and other small businesses to telecom providers and manufacturers.
The Natural Oil and Gas Suppliers Association (NOGASA) sounded the warning in Abuja, saying the cost of diesel will keep on ballooning unless the government takes drastic measures to tackle the challenges faced by diesel importers.
“If you go round now you will see that about 75 per cent of filling stations in Nigeria have gone out of business. There is no diesel to take fuel to their stations. All of them are going down.
“And it is not that the fuel is not there, but the cost of bringing it to the stations is too high,” NOGASA President Bennett Korie explained.
“We know that the crisis between Ukraine and Russia has contributed badly, but the government has to do something fast, otherwise we are going to buy diesel in the next two weeks at N1,000 to N1,500 per litre.”
He said the high cost of diesel is the reason why petrol scarcity has continued in Abuja and the neighbouring Nasarawa and Niger.
“As far as I am concerned, nothing for now. The only way out, if you want to know, is that they (the government) should increase the price of fuel a little to reduce the money spent on PMS [petrol] subsidy.
“I know Nigerians will not be happy to hear this, but this is the only solution. They should increase the price of fuel a little so that the savings will enable the Central Bank of Nigeria [CBN] to have enough foreign exchange [forex].
“You and I know that we import everything now in Nigeria. Diesel is an imported product and it is fully deregulated. So the importers are not getting dollars at the official CBN rate to import diesel.
“Everybody is going to the black market to get dollars to import their products and so you expect the price of diesel to be high.”
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Korie urged Abuja to reduce the rate at which it spends forex on refined petrol imports so as to enable diesel importers bring in products at lower prices, according to reporting by Nairametrics.
“The price is N850/litre and you are giving your driver 1,200 litres from Lagos to Abuja, if you do the calculation you will find out that the landing cost [for transporting the fuel] is about N40/litre.
“So if you add that to PMS, buying at the depot price and selling here, it is too high. So if your cost of bringing it in is at N40/litre and you bought it at N155/litre, when you add this you will get N195/litre.
“But you are to sell at N165/litre. So who will do that kind of business? It is already a loss-making business.”
Russian effect
“Europe imports about half of its diesel from Russia and about half of its diesel from the Middle East,” noted Russell Hardy, head of oil trader Vitol.
He said there is a systemic shortfall of diesel as Russian imports account for roughly 15 per cent of Europe’s diesel consumption and crude oil from Russia processed in Europe.
“The shift to more diesel consumption over petrol in Europe had created shortages of the fuel,” Hardy added, warning that refineries could boost diesel output in response to higher prices at the expense of other oil-derived products to shore up supply.
The heads of three of the largest commodity traders – Vitol, Gunvor, and Trafigura – warned at the Financial Times Global Summit in Lausanne, Switzerland in March that 3 million barrels a day would be taken off the market due to sanctions on Russia.
