By this time of the year, it is not unusual that the price of Premium Motor Spirit (PMS) is always on the high side. This is because attention most often is given to Heating oil that is normally in high demand, especially between the month of October and January in Europe and North America which is winter.
This is the time Nigerians usually experience queues at filling stations because oil traders find it difficult to meet the their required cargoes because refineries in Europe and North America pay less attention to gasoline and concentrate on Heating Oil.
Heating oil is a low viscosity, liquid petroleum product used as a fuel oil for furnaces or boilers in buildings. Heating oil condenses at a lower temperature than petroleum jelly, bitumen, candle wax, and lubricating oil, but at a higher temperature than kerosene, which condenses between 160–250 °C (320–482 °F
The other reason that may be attributed to the high price of PMS at this point in time is the slight increase of about four percent in the price of crude oil and the news of another potential vaccine that health officials claimed has high prospect for reducing the impact of COVID19 as well as the bullish economic data from china. Usually, an increase in the price of crude Oil is followed by increase in the price of PMS or petrol.
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Still on Heating Oil, at this period across Europe and America, refineries are adjusted to produce more of heating oil and less of gasoline, that is Premium Motor Spirit or Petrol. So for an importer to get PMS to bring into the country he must have to pay a premium to get the required volume or number of cargoes they can bring. It is this premium that has been included into the local price which jerked up the price of PMS.
Again, the price of crude oil in recent time has been within the range of $ 40 to $ 45 per barrel. This was automatically reflected in the price of PMS in the country.
Businessday investigation revealed that marketers in the course of preparing for imports for December had approached the PPPRA on the need to add premium to the cost of importing the fuel which would have been embedded into the landing cost of the cargo, but the agency declined, stating that it was set up for political reasons,. That it is to ensure that price PMS does not up to the extent that Nigerians would find it difficult to buy. In other words, its business is not for the commercial viability of the service.
Those who engage in the supply through Direct Sale and Direct Supply (DSDP) it was learnt had already added the premium to the cost of supplying the product. So when PPMC which is the sole supplier of the product to oil marketers was confronted with huge cost of the product, it then decided to add its own premium to the landing cost which put the exdepot price at N155.17 per litre.
The organisation in intimating the marketers about the new development in relation to the new ex -depot price
stated in an internal memo with reference number PPMC/C/ MK/003, dated November 11, 2020, signed by PPMC’S Manager Marketing, Tijjani Ali and addressed to oil marketers that it has increased the ex-depot price of the product, to N155.17 per litre from N147.67 per litre.
The ex-depot price is the price at which the product is sold by the PPMC to marketers at their various depots. Consequently, marketers are to be dispensing the product to motorists within a band of N165 and N173 per litre depending on location.
Unfortunately for us in Nigeria, our refineries are not working and we depend solely on importation of PMS. The burden of augmenting the price of PMS would have been higher on the government this time around assuming there has not been partial deregulation or liberalization of the downstream sector.
The price modulation policy which is to ensure that when the price of crude oil goes up, the price of gasoline automatically follow suit is what is actually in action in Nigeria. Hence, if there is a slight rise in the price of crude oil the impact would automatically be felt by the generality of Nigerians.
If our refineries are working, one of the major cost components which is freight cost and other charges like port charges which is paid in dollar would have been eliminated. But the inability of the government over the years to either sell the refineries or fix them is suffocating the economic life of the people.
With price ranging between N163 and N170 per litre, it has also translated to the prices of other commodities, such as foods and transportation
One is alarmed by the resentment exhibited by the Organised private Sector ( Ops)which has been the lead advocate of those clamouring for downstream deregulation with this recent increase in the price of PMS.
Oil prices are expected to rise just a few dollars per barrel in the fourth quarter, and OPEC and its partners may have no alternative but to extend deep production cuts to support the market.
The fall off in air travel and a warm winter may keep pressure on distillate fuels, an important source of oil demand.
“The oil market is taking Covid the hardest of all of the asset classes out there,” said one analyst.
There are chances that if some members of OPEC are able to push through with their demand for further production cut Nigerians would be in more trouble as they the prices or crude might be further up. It then means that by then the price of petrol would be about N200 per litre.
By this time of the year, it is not unusual that the price Premium Motor Spirit ( PMS ) is always on the high side . This is because attention most often is given to Heating oil that is normally high demand, especially between the month of October and January in Europe and North America which is winter.
Heating oil is a low viscosity, liquid petroleum product used as a fuel oil for furnaces or boilers in buildings. Heating oil condenses at a lower temperature than petroleum jelly, bitumen, candle wax, and lubricating oil, but at a higher temperature than kerosene, which condenses between 160–250 °C (320–482 °F
The other reason that may be attributed the high price of PMS at this point in time was slight increase of about 4 percent in the price of crude oil and the news of another potential vaccine that health official claimed has high prospect for reducing the impact of COVID19 as well as the bullish economic data from china. Usually an increase in the price of crude Oil is followed by increase in the price of PMS or petrol.
Still on Heating Oil , at this period across Europe and America refineries are adjusted to produce more of heating oil and less of gasoline, that is Premium Motor Spirit or Petrol. So for an importer to get PMS to bring into the country he must have to pay a premium to get the required volume or number of cargoes they can bring. It is this premium that has been included into the local price jerked up the price of PMS.
Again, the price of crude oil in recent time has been within the range of $ 40 to $ 45 per barrel. This was automatically reflected in the price of PMS in the country.
• Businessday investigation revealed that marketers in the course of preparing for imports for December had approached the PPPRA on the need to add premium to the cost of importing the fuel which would have been embedded into the landing cost of the cargo, but the agency declined ,stating that it was set up for political reasons. That is it to ensure that price PMS does not up to the extent that Nigerians would find it difficult to buy. In other words its business is not the commercial viability of the service.
