Marketers Fear Epileptic Fuel Supply Amid Instability in PMS Prices

Petroleum product marketers are raising concerns about potential disruptions in Premium Motor Spirit (PMS) supply due to price instability. While fuel scarcity may not occur because of sufficient local refining capacity, filling station operators are reportedly hesitant to lift products from depots, fearing financial losses tied to fluctuating prices.

Speaking with journalists, Chinedu Ukadike, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), revealed that marketers lose billions of naira when PMS and diesel prices drop unexpectedly.

He explained that the market volatility began after the Dangote refinery entered production in early 2024, crashing diesel prices and forcing marketers to sell at losses.

“Everybody is trying to be very careful. It’s not that there is no product; there is availability. But the price scare is making everyone cautious,” Ukadike said.

He noted that price increases do not automatically translate into profit margins for marketers but are instead necessary to keep up with market rates.

“If the price goes up and you sell at the old price, you will not be able to recover enough to continue operations,” he added.

The Federal Government’s full deregulation of the downstream petroleum sector, combined with frequent price adjustments by the Dangote refinery and the Nigerian National Petroleum Company Limited (NNPCL), has further complicated market conditions.

Impact on Small Players

According to Ukadike, smaller players in the sector are exiting due to high operating costs and tight profit margins. He highlighted the financial strain of purchasing a 45,000-litre truck of PMS at nearly N50 million, with potential profits of less than N300,000, questioning the sustainability of such operations.

“The business is becoming something else. Very soon, it will be left for the big players. Small marketers cannot keep up with the huge financial demands,” he warned.

Potential for Supply Disruptions

While Ukadike ruled out full-scale fuel scarcity, he cautioned that supply may become erratic, especially in rural areas, due to “price scare” among marketers.

“There won’t be scarcity as long as domestic refining continues, but there could be epileptic supply caused by caution among marketers,” he noted.

Rising PMS Prices

As of Monday, PMS prices ranged from N960 to N1,000 per litre in Lagos and Abuja. The Dangote refinery supplies petrol at N970 per litre, while the NNPCL’s price is N960 per litre. These figures exceed the cost of imported PMS, which marketers argue is cheaper at a landing cost of N922 per litre.

Calls for Support

The National President of the Petroleum Products Retail Outlet Owners Association of Nigeria (PETROAN), Billy Gillis-Harry, acknowledged that some marketers were considering imports but emphasized the need to prioritize local refining capacity.

“We agreed to stop imports to grow the local economy and boost local refining capacity,” he said, urging the government to provide single-digit interest loans to support retail outlet owners and prevent job losses.

The petroleum industry’s deregulation and volatile price dynamics have left marketers navigating uncertain terrain, with fears of an increasingly challenging business environment.

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