Following the suspension of the sale of petroleum products in naira by the Dangote Petroleum Refinery, some filling stations have started stockpiling Premium Motor Spirit (PMS), commonly known as petrol.
These retailers are amassing fuel to ensure they have sufficient stock to sell at a higher rate, anticipating a price increase due to the Federal Government’s failure to continue selling crude oil to the Dangote refinery in local currency.
However, the Independent Petroleum Marketers Association of Nigeria (IPMAN) has urged these retailers to stop panic buying, warning that they may face significant losses.
Last week, Dangote Refinery announced that it had temporarily halted the sale of petroleum products in naira, as negotiations over naira-for-crude transactions between it and the Nigerian National Petroleum Corporation Limited (NNPCL) appeared to have stalled.
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The 650,000 barrels per day capacity refinery expressed concern over a mismatch between its sales proceeds and crude oil purchase obligations, which are currently denominated in US dollars.
“Dear valued customers, we wish to inform you that the Dangote Petroleum Refinery has temporarily halted the sale of petroleum products in naira. This decision is necessary to avoid a mismatch between our sales proceeds and our crude oil purchase obligations, which are currently denominated in US dollars,” the company announced.
“To date, our sales of petroleum products in naira have exceeded the value of naira-denominated crude we have received. As a result, we must temporarily adjust our sales currency to align with our crude procurement currency.”
Immediately following the announcement, the cost of loading petrol at private depots in Lagos surged to approximately N900 per litre, up from less than N850 per litre before the statement.
In an interview with our correspondent on Sunday, the National Publicity Secretary of IPMAN, Chinedu Ukadike, accused depot owners of profiteering as some filling station owners rushed to stockpile fuel.
He noted that the demand for PMS had increased since Wednesday, when Dangote made its announcement. Consequently, depot owners raised prices to maximise profits.
It was observed that industry players in the downstream petroleum sector were left speculating on fuel prices, as the Federal Government had remained silent since the Dangote refinery’s announcement.
Five days after the announcement, the refinery had yet to provide guidance to marketers on how they would purchase PMS going forward.
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Private depot owners quickly increased their prices in anticipation of a possible hike in petrol prices. While filling station owners have yet to raise their prices, many are already purchasing petrol with plans to sell it for a higher profit once the price rises.
However, Ukadike condemned depot owners for exploiting the situation, stating that such behaviour is detrimental to the economy.
He further cautioned marketers against panic-buying, warning that the Dangote refinery may eventually lower prices.
“We, the independent marketers, are advising our members not to purchase excessive quantities, as buying large volumes of fuel at a higher rate from depot owners could result in significant capital losses,” Ukadike warned.
“Dangote may lower the price, and those with large stocks of PMS could face serious financial difficulties. Marketers must proceed cautiously to avoid losses,” he advised.
The IPMAN spokesperson confirmed that the Federal Government and Dangote Refinery are working to resolve their differences, with discussions ongoing to resume naira-based crude sales. Stakeholders are awaiting updates from both parties.
