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Nigeria: Suppliers warn as diesel could hit ₦1,500 per litre in weeks, calls for PMS subsidy removal

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In Nigeria, the Natural Oil and Gas Suppliers Association (NOGASA) warned that the cost of diesel per litre is expected to increase from N800 to N1,500 within the next two weeks.

NOGASA made the disclosure on Tuesday during a media briefing in Abuja, Nigeria’s capital city.

The National President, NOGASA, Bennett Korie, said that about 75% of filling stations in Nigeria have gone out of business.

There is no diesel to take fuel to their stations. All of them are going down.

“And it is not that the fuel is not there, but the cost of bringing it to the stations is too high. We know that the crisis between Ukraine and Russia has contributed badly, but the government has to do something fast, otherwise we are going to buy diesel in the next two weeks at N1000 to N1500/litre.” Korie said.

The pressure group leader argued that the way out of the price surge is for the government increase the price of Premium Motor Spirit (PMS), popularly called petrol little to reduce the money spent on subsidizing it.

“I know Nigerians will not be happy to hear this, but this is the only solution. They should increase the price of fuel a little so that the savings will enable the Central Bank of Nigeria to have enough foreign exchange.

“You and I know that we import everything now in Nigeria. Diesel is an imported product and it is fully deregulated. So the importers are not getting dollars at the official CBN rate to import diesel. Everybody is going to the black market to get dollars to import their products and so you expect the price of diesel to be high,” he added.

Despite her increasing debt profile, Nigeria’s government in January postponed its planned removal of subsidy on petroleum products till further notice. Petrol subsidy payments reportedly gulped overN1.15 trillion 2021 alone, resulting in low revenue for federal, state and local governments to cater for developmental projects.

There was a continued scarcity of Premium Motor Spirit (PMS), popularly called petrol in Nigeria, while the price of diesel hit a record high at ₦900 per litre in filling stations in March.

The hike in fuel price affects Nigeria’s economy immensely as Nigeria’s epileptic power situation means they are all run on fuel for operations. Industries like aviationtelecom operators have all lamented over the situation and have disrupted business operations.

The ongoing Russia/Ukraine war has contributed immensely to the shortage of diesel globally, has ongoing sanctions on Russia, which is expected to affect poorer nations from Nigeria to Sri Lanka that import its diesel.

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Nigeria: Marketers predict further price cut as another refinery begins operations

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Oil marketers and the Nigerian Midstream and Downstream Petroleum Regulatory Authority expect refined petroleum product prices to reduce as another public refinery in Warri begins operations.

The marketers made the prediction when the Nigerian National Petroleum Company Limited launched the 125,000-barrel-per-day Delta State WRPC. NNPCL also wants to export locally refined goods for foreign cash. Last month, the 60,000-barrel-per-day Port Harcourt Refinery in Rivers State began operations.

During an inspection tour of the facility on Monday, the NNPCL Group Chief Executive Officer, Mele Kyari, explained that the inspection aimed to show Nigerians the level of work completed so far.

During a tour with NMDPRA CEO Farouk Ahmed and NNPC Board Chairman Pius Akinyelure, Kyari said that while facility repairs were not yet 100% complete, refining operations had begun and would produce straight-run kerosene, diesel and naphtha.

In a statement commemorating the milestone, President Bola Tinubu stated the plant is functioning at 60% or 75,000 barrels per day.

Kyari said, “We are taking you through our plant. This plant is running. Although it is not 100 per cent complete, we are still in the process. Many people think these things are not real. They think real things are not possible in this country. We want you to see that this is real.”

Since some of these goods would be shipped to foreign markets, he said, the reopening of the Warri refinery will help the country become a net exporter of petroleum products.

“Secondly, this plant had three stages; we have started plant one, which we call Area One. It can produce AGO (diesel), kerosene, naphtha, and a blend of crude oil. These are high-grade quality products required in the country, and we may need to export them. So this will give us cash, this company will make money and the promise of Mr President that this country must be a net exporter of petroleum products is already happening. Some of these products will go into the international market.

“Most importantly, I must put on record that Mr President believes that we can get this to work and get them to start and gave us the charge that we must start all three refineries. It’s already happening; we have started the 60,000 barrels per day refinery, and Area One of the Warri refinery is already working. Other plants that would produce PMS are being streamed and they would also come alive.

Mustapha Zarma, the Independent Petroleum Marketers Association of Nigeria’s National Operations Controller, stated that the rivalry in the downstream oil industry will become more fierce.

There will undoubtedly be a further decrease in pricing if the plant begins producing goods in bulk, he stated. This is because the market will ultimately be influenced by market forces and there will be fierce rivalry.

Until recently, none of Nigeria’s publicly owned refineries has worked to capacity for years, despite several investments to revive them. The failure of the government to revive them contributed to the high level of national anticipation surrounding the Dangote refinery whose operations appear to have revolutionalised the industry.

The refinery will concentrate on manufacturing and storing essential goods, such as heavy and light naphtha, automotive petrol oil and straight-run kerosene.

The country’s first fully owned refinery, the WRPC, was put into service in 1978 and is situated in Warri, Delta State, Nigeria. It was first built to process 100,000 barrels of crude oil a day, but in 1987 it was updated to process 125,000 barrels.

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Kenya: Consumer inflation rises to 3.0% from 2.8%

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Kenya’s statistics agency said on Tuesday that Kenya’s consumer price inflation increased slightly to 3.0% year-over-year in December from 2.8% the previous month.

According to a release from the Kenya National Bureau of Statistics, monthly inflation was 0.6%, down from 0.3% in November. Kenya aims to have a medium-term inflation rate of 2.5% to 7.5%.

With inflation under control, Kenya’s central bank said there was an opportunity for looser policy to assist economic development, lowering its benchmark lending rate by a larger-than-expected 75 basis points to 11.25% on December 5.

 

Kenya’s GDP expanded by 5.2% in 2023, up from 4.8% in 2022, thanks to a recovery in agriculture and a modest increase in services. Household consumption accounted for 70% of the growth on the demand side, while services and agriculture accounted for 69% and 23% of the growth, respectively, on the supply side.

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