PETROLEUM PUMP PRICE WILL BE SOLD AT BELOW N145 A LITRE IN A MONTH’s TIME WITH THE NEW N283 EQUILIBRIUM PRICE OF DOLLARS –NAIRA EXCHANGE RATE

PETROLEUM PUMP PRICE WILL BE SOLD AT BELOW N145 A LITRE IN A MONTH’s TIME WITH THE NEW N283 EQUILIBRIUM PRICE OF DOLLARS –NAIRA EXCHANGE RATE
    By: 
Nurudeen Dauda
June 27, 2016
nurudeendauda24@gmail.com 
nurudeendauda24@yahoo.com 
nurudeendauda.blogspot.com
                                nurudeendauda24@yahoo.com
“FOREX: Marketers say petrol price will crash soon: Nigerians will experience a further reduction in the pump price of …petrol, in the coming weeks as a result of the recently introduced foreign exchange policy by the Central Bank of Nigeria, oil marketers have said. The Corporate Affairs Manager, NIPCO PLC a popular oil marketing firm, Mr Taofeeq Lawal, told our correspondence  that some marketers were able to assess Forex at N250 to a Dollar when the policy was initially introduced by the central bank, as against the N360 rate of the parallel market”-(PUCNCH:JUNE 26,2016:P.9).
The estimated “lowest” price of N135 and the “maximum” price ceiled of N145 reached out by the Petroleum Product Pricing Regulatory Agency (PPPRA) were based on the N288 to $1 EXCHANGE RATE. However, oil marketers have more chances to reduce the pump price and still make profit.
“For, example, if you got the dollar at between N250 and N280 since the policy started last week, and government had projected it at between N285 and N289 as contained in the PPPRA template, then you should expect some crash in prices (of fuel) in the near future, Even if you get the dollar at N250 and you order products, it will take a minimum of three to four weeks before the products will get to Nigeria. So, If the dollar rate can be maintained and if people can be lucky to get it below the projected N288 peg of government in the PPPRA template, and if you are able to get it at N250 and you want to pull volume, why won’t you reduce your price? Therefore, if the new forex policy is sustained, there is no way petrol prices won’t fall” -(PUCNCH:JUNE 26,2016:P.9).
Before the De-regulation of the petroleum downstream sector we have only some selected “few” Nigerians as oil marketers who were given licenses to import petroleum product and in return they were being paid subsidies.  With the new decision it means every Nigerian has the right to become an oil importer; every Nigerian now has the right to import petroleum product and sale it between N135 to N145. Before this decision the government had “FIXED” the price at N86, but we bought it between N150 or N200 or N250. 
However, the present decision is called “PRICE CEILLING” as against “PRICE FIXING”. Price fixing means you are not allowed to sale below or above certain price while price ceiling means you cannot sale above certain price but can be sold below it. More so, deregulation of the petroleum downstream sector means you cannot sell above N145 but petrol sellers A, B, C and D could sale between N135 to N145 depending on how they get their petrol. 
The Deregulation of the “petroleum downstream” sector was caused essentially by “scarcity” of dollars not the much talked about “subsidy” as the “subsidy” we paid then due to the collapse in the price of crude in the global market was just about N13 per litre unlike in the past when the government paid about N80 per litre. Before the deregulation of the downstream sector about 70% of our dollars earning from the sales of crude oil were used for the importation of refined products. 
"According to information from CBN the fall in the price of oil has reduced monthly earnings of the Bank from $3.2bn to about $1bn. At the same time, request for foreign exchange jumped from N148bn in 2005 to N917bn (or 4.6bn monthly) In 2015, a whopping increase of 519%. A projection has it that our foreign Reserves, which have plummeted by 25% in 18 months, will not only wiped out in the next nine months but will also be in the negative if CBN decides to meet all request for foreign exchange. This is because the monthly possible rate of depletion ($. 4.6bn) is higher than the actual rate of addition ($1bn) by almost a ratio of five to one. Given that most of our foreign exchange is from oil and the outlook for oil price looks grim ..." This-Day, Newspapers, 1st February , 2016. "The federal government's dollar earnings have also nose-dived, with crude oil trading at $35 per barrel against $125 per barrel 16 months ago" (The Nations, Friday, February 19, 2016, P. 3).

May God bless Nigeria!

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