The landing cost excludes other additional costs which include deport-related charges, transportation logistics and marketers’ margin, which would combine to bring delivery at filling stations at nearly N700/litre.
Sources around oil marketers said that the landing cost for August is expected to rise further as the factors that propelled the rise in July figures have worsened as of last week.
Giving further insight, they said foreign exchange has been a major concern where scarcity has persisted while the exchange rate has also continued to deteriorate.
As of last weekend, Naira had depreciated by about 6.5 percent in the official market and 25 percent in the parallel market since the last pump price raise.
The marketers also noted that the cost of fuel import is rising in response to the recent rises in the price of crude oil in the international market.
A transactional analysis of a major operator, last weekend showed that marketers were paying N604.14 per litre as a total direct cost.
A breakdown shows product cost per liter at N578.46, freight (Lome-Lagos) at N10.37, port charges at N7.37, NMDPRA levy of N4.47, storage cost at N2.58, Marine insurance cost at N0.47, fendering cost at N0.36 and ”others” at N0.05 as well as a finance cost amounting to N28.04.
Specifically, the transactional analysis put the landing cost of 28,000 metric tons of imported petrol at over $25 million, including total product cost, total direct cost, and total finance cost, capable of generating more than N22 billion as sales revenue, indicating a loss of over N1.6 billion.
As a result of this development, the marketers said it would be unprofitable to import at the current pump price, while the government has not guaranteed a free float of pump prices.
Consequently, the Nigerian National Petroleum Company Limited, NNPCL, has remained the only importer aside from the minor private importation recorded last month.
The situation appears worsening as Nigeria’s crude oil output is now declining threatening the capacity to import refined products.
In its August 2023 Monthly Oil Market Report, MOMR, obtained by this media Organisation of Petroleum Exporting Countries, OPEC, noted the dwindling output of many nations, adding that Nigeria’s oil production dropped on a year-on-year, YoY, basis by 6.5 percent to 1.26 million barrels per day, bpd in July 2023, from 1.2 million bpd recorded in the corresponding period of 2022.
It also noted that on a month-on-month, MoM basis, the nation’s output dropped by 3.0 percent to 1.26 million bpd in July 2023, from 1.3 million bpd in June 2023.
Experts give insight
Commenting on the oil price situation in a telephone interview, the National Operations Controller, of the Independent Petroleum Marketers Association of Nigeria, IPMAN, Mike Osatuyi, said: “It is good because the high crude oil prices mean additional revenue to the federal government. The revenue would likely be used to fund projects and programs because the government is no more involved in the payment of fuel subsidy.”
He, however, added: “But Nigerians will have to pay more for fuel, which prices have been deregulated. The prices are currently high, but we are optimistic that the prices will fall as a result of competition in the future.” Market volatility discourages importation, investment – Marketer