No chance Nigeria will raise fuel prices before 2019- Marketers
Oil marketers in Nigeria say there is little or no chance petrol price will be raised before the next general elections in 2019 despite government revenues falling far behind projections.
Petrol pump price is capped at N145 a litre by government and this means that virtually all of the country’s supply of petrol has to be met by the Nigerian National Petroleum Corporation through crude swap contracts.
Gabriel Ogbechie CEO of Rainoil, an integrated downstream company that holds one of the crude for fuels swap contacts, says while it makes sense for the government to deregulate petrol prices, he does not see that happening ahead of the next election.
Speaking at a Platts refining conference in Brussels, he said, “the price of petroleum products is a highly emotive issue…and the election cycle has already started.”
While government is unwilling to deregulate prices, it is also delaying the country’s target to slash allowed sulphur on imports to 50 parts per million (ppm) for deisel and 150 ppm for gasoline. The target has been moved from July to December but Ogbechie is of the view that the chances of meeting this new deadline are nil.
“I don’t see that happening,” Ogbechie said.
The current maximum sulphur level is 1,000 ppm for gasoline and 3,000 ppm for diesel.
Contract for crude-for-fuels swaps have been the main source for the country’s gasoline imports in the past two years.
Prices for lower sulphur fuels were included in those contracts, but Ogbechie said that as long as the government caps gasoline prices, it will not opt for higher quality fuel that would cost $10-$20 more per tonne.
“That’s an extra $300,000-$600,000 per cargo. Is the government ready to absorb that cost? The answer today is no,” he said.
Big Read |