• Sunday, June 23, 2024
businessday logo

BusinessDay

Marketers must increase prices to stay afloat — IPMAN

It is official: Petrol price deregulation is over, at least for now.

The Independent Petroleum Marketers Association of Nigeria (IPMAN) has said that its members need to increase the price of PMS to stay afloat and remain in business as the fundamentals of a deregulated market takes toll.

Chinedu Okoronkwo, IPMAN President, who granted interviews in line with the new development said following the removal of subsidy and the deregulation of the PMS market, many IPMAN members have gone out of business as they were unable to raise money to load from depots and the Nigerian National Petroleum Company (NNPC) Limited.

BusinessDay had earlier reported the significant increase in ex-depot price to over N470 per liter in June which was after the subsidy removal was announced.

Okoronkwo, said the crude oil market is operating with dollars which is now over $800, adding that the price of Brent crude is now over $79 per barrel.

Read also: FAAC windfall: Eyes on squandermania governors

“In a deregulated regime, what determines the price is cost, the product is imported and the volatility is there; you must get the price at the depot then you begin to add up other variables that will bring the escalation of the price a lot of things are suffering now because we cannot control market fundamentals,” he said.

Okoronkwo said with the price adjustment by the NNPCL on Tuesday morning, independent marketers raised their prices at retail outlets to match the reality of the times.

“You need to be in business. If you go back, you will go and buy at a new price. Assuming you are selling N520, then there is a sudden change from where you are getting it, you have to still be in business,” he said.

He added that some members have experienced situations whereby after loading their tankers, they received information about a new price change despite having to deal with the increase in the supposed old price.

Their situation is worsened by the lack of credit seeing that Nigerian banks had been burnt due to lending to oil marketers in the past and have no appetite for further lending.

Hence as their inventory runs out, many are now jittery over the reality that if they must remain in business they would have to source their dollars, import their own crude and truck it across Nigeria.

Okoronkwo said that the government must work on how to mitigate the effect of the price adjustment and ease the pressure on the dollar.

Farouk Ahmed, chief executive, Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) after a meeting with marketers on Monday said since the removal of subsidy , marketers have been encouraged to get licenses to import.

He said about 56 marketing companies applied and obtained the license to import PMS and about 10 indicated ability to import between July and September, three of which have landed cargos.