Forex, Oil and Gas specialist Mr. Emmanuel Iheanacho has emphasized that the recent uptick in the value of the naira will not automatically lead to a reduction in petroleum pump prices.
Iheanacho, who chairs Integrated Oil and Gas Ltd., shared this insight in an interview with reporters in Lagos on Tuesday. He clarified this point amidst speculations that the decrease in foreign exchange rates would directly affect petrol sales.
He explained that the pricing of gasoline at fuel stations is not solely determined by market dynamics like exchange rate fluctuations. Instead, it is primarily dictated by government regulations or directives from entities like the Nigerian National Petroleum Company Ltd.
Iheanacho highlighted the significant disparity between the landing cost of petrol in Nigeria and its selling price at the pump. This disparity, he noted, results in a visible subsidy being paid for each liter of petrol consumed in the country.
He emphasized that this situation would persist until the petroleum market is fully deregulated and liberalized. The current pump price, he stressed, remains fixed and is not responsive to market forces such as exchange rate fluctuations.
The oil expert pointed out that other factors, including market competitiveness, the presence of monopolistic entities, and the availability of forex to downstream traders, also influence pricing dynamics. These factors collectively impact the fluctuations in petrol pump prices.
Forex
Regarding pricing discrepancies among downstream traders, Iheanacho attributed these variations to individual marketers’ supply and distribution costs after receiving product allocations from the NNPC.
