Bennett Korie, the National President of the Natural Oil and Gas Suppliers Association, has predicted that if severe measures are not taken to address the difficulties confronting Nigerian importers, the price of diesel might reach N1,500 in the next two weeks.
In an interview with journalists in Abuja on Wednesday, Korie said that roughly 75% of filling stations across the country are currently out of business due to a lack of diesel to power their tankers and deliver Premium Motor Spirit, also known as gasoline, to their various outlets.
He believes that the only way to address the current problem is for the federal government to boost the price of gasoline at the pump by a small amount in order to reduce the massive foreign exchange used in PMS imports.
“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. 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 N1000 to N1500/litre.”
He therefore advised the federal government to increase the price of fuel so that the savings would enable the Central Bank of Nigeria have enough foreign exchange.
“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 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 to have enough foreign exchange”
“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.”
Korie suggested that the Federal government needs to reduce the rate at which it spends foreign exchange on PMS imports as it will help other businessmen who import diesel to bring in products at low prices.
“So you need to increase fuel price a little in order to ensure that the dollars spent in importing petrol is reduced and there will be enough Forex for importers of diesel and this will cut down the price of diesel,” he said.
Speaking further, he said the reason for fuel scarcity especially Abuja is as a result of the high cost of diesel.
“The reason why you are having scarcity of petroleum products particularly in Abuja is as a result of the high cost of diesel. The price of diesel today in the market is N850/litre. You will also agree with me that the money being paid as bridging claims to transporters is not enough.
“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.”
