MEMAN Advocates for Denominating Downstream Supply Chain in Local Currency
The Major Energies Marketers Association of Nigeria (MEMAN) has called for the dedolarization of transactions within the petroleum products distribution and supply chain due to the increasing complexities posed by fluctuations in the foreign exchange market.
Mr. Clement Isong, the Executive Secretary of MEMAN, conveyed these concerns during a media briefing organized by the association in Lagos. Isong highlighted the challenges faced by members in importing Premium Motor Spirit (PMS or petrol) due to the uncertainty in the forex market, making it difficult to accurately calculate the product’s landing cost and determine appropriate pump prices.
He emphasized that the dollarization of certain charges, such as those imposed by the Nigerian Ports Authority (NPA) and the Nigerian Maritime Administration and Safety Agency (NIMASA), poses risks to investments and contributes to the escalation of pump prices.
Isong pointed out that while marketers receive products from the Nigerian National Petroleum Company Limited (NNPCL) Trading, transactions involving ship-to-ship product offloading are conducted in dollars, further inflating costs.
Acknowledging the Federal Government’s efforts in intervening in the industry since the removal of petrol subsidy, Isong expressed concerns over the impact of the dollarization policy on the industry’s stability and investment climate, attributing much of the blame to fluctuating dollar movements and unpredictable exchange rates.
He cited examples of how costs have escalated due to the depreciation of the local currency against the dollar, affecting both fuel prices and transportation costs.
In light of these challenges, Isong advocated for a transition towards leveraging gas as an alternative energy source, encouraging depot operators and filling stations to consider adopting Compressed Natural Gas (CNG) and other renewable energy sources like solar to mitigate rising operational costs.
Isong clarified misconceptions about the return of subsidies, stating that government interventions aimed at stabilizing fuel prices shouldn’t be mistaken for subsidy payments. He referenced President Tinubu’s commitment to monitoring exchange rates and inflation’s effects on gasoline prices, highlighting the need for a paradigm shift to reduce operating costs and promote sustainable energy solutions.
MEMAN specialists further emphasized the benefits of transitioning to CNG and expanding LPG applications in both industrial and automotive sectors, stressing the importance of government interventions and infrastructure deployment to facilitate this transition.
Source: MEMAN
