The Natural Oil and Gas Suppliers Association of Nigeria (NOGASA) has urged the federal government to tame the worsening exchange rate crisis, by adopting the N750/$ 2024 Budget exchange rate benchmark as its official exchange rate.
The association also urged the federal government to ensure that payments for petroleum products are made in naira, as part of measures to address the continued rise in prices of petroleum products.
National president of the association, Benneth Korie, stated this during a press briefing in Abuja on Tuesday.
According to him, most Nigerians have made dollar their main currency used in trading, adding that the rise in exchange rate was a major challenge to the modular refineries in the country.
He blamed the rising cost of diesel and the high dollar rate for the worsening petrol price.
He warned that should the federal government fail to address the challenges, the hostile business environment will naturally liquidate marketers of petrol to fold up before the end of February 2024.
The NOGASA boss said: “Fix that diesel problem then PMS will be stable. If NNPC will keep the PMS price from June to date, is there anything wrong with doing it for AGO?
“So, let the government, if the government wants to be fair, wants to do the deregulation properly, the diesel too should go the same way PMS is going.
“Heavens will not fall if you sell AGO N650/litre. The same magic that they have in PMS, the government should apply it on AGO, and then you should see things ease.”
He decried that the Nigerian Maritime Administration and Safety Agency, (NIMASA) and Nigerian Port Authority (NPA) were requesting for dollar payment for services rendered to Nigerians in Nigeria.
He said, “the problem we have is we trade, we recognise others without recognising our own. There is no reason for us to be trading with dollars.
“The problem we are facing today is as a result of the dollars. We want to tell Nigerians what we, the marketers are going through as a result of dollars and what the price of diesel is doing to us. We supported the removal of the subsidy when it was introduced by the President, but today, the system is not working well.
“What is this problem, if you are buying PMS at N620 for example, you will use diesel of N1700 to transport it, because it is like the diesel and dollar are going up at same time, which is wrong.
“So the answer to all these problems is that our refineries must come up and our refined product must be sold in naira. If for example crude is $80 per barrel, we should convert it to naira and sell to Nigerians at the naira rate.
“So let me start by telling you the implications. The problem holding most of these refineries and modular refineries from coming up is the exchange rate, so the answer to this is for government to come out and tell Nigerians, this is how much the dollar is, not this window forex rate we hear on TV, let the government come out and tell us the rate, not the black market.
“I know our budget this year was benchmarked at N750/$, so if the government can maintain N750/$ heaven will not fall, inflow or no inflow. It is not the first time we are seeing price at N400 and they are selling for N800, so let’s go back and try it, because if we allow this to continue, the dollar may get to what we cannot handle and all our food will be sold at dollar rate if care is not taken.”
Speaking further, Korie stressed on the need for standard road infrastructure across the country, stating that this will lead to reduction in the need for spare parts which is leading to the increasing need for dollars among petroleum product suppliers.
He explained that the move to withdraw service by the Nigerian Association of Road Transport Owners (NARTO) was as a result of the high cost of diesel. “You cannot go to Lagos to transport PMS to the North with N1700 cost of diesel, it is not possible, it is a suicidal mission, nobody will make 1kobo, so that NARTO struggle is OK.
“And I believe that the government will do whatever they can do to resolve it between today and tomorrow so that we start our operations. Another thing that I will suggest is that we concentrate on road construction to reduce the rate at which we maintain our trucks in Nigerians.
“We are talking about the dollars, you will agree with me that 70 per cent of our dollars go to spare parts. And these spare parts are vehicle spare parts and that is where the dollar is going.
“If you fix the roads and the roads are good, vehicles will spend like 10 years without the need for spare parts, so the people importing spare parts will not have need for dollars, but we are busy bringing different types of vehicles into the country.
“So we need to fix the roads, and this will also create jobs for our youths and the economy will be moving. Construction of roads is very important.”
He also advised the government to reintroduce the bridging (petroleum equalisation fund) back to the system so that it will reduce the rate, the hardship. “Because it will help, we understand that over some trillion has been spent on subsidies, so there is nothing bad if we introduce bridging and it will not take up to one quarter of that and it will reduce pressure on transport cost.
Korie, hinting on plans to withdraw service if their concerns were not addressed before the end of the month, said that the high interest rate charged by banks was also a challenge to their operations.
According to him, the difficulties in getting bank loans have pushed over 70 per cent of oil traders out of business, “so it is better that the government look into this issue before it gets out of hand, because many of them cannot talk but they come to us to complain, so we just want to tell Nigeria government that if something is not done from now till the end of this month, it will affect the marketers.
“Today if you want to buy one truck of PMS, you will spend N30 million and if you go to the bank to get N30 million at over 30 per cent interest, you know how much you will pay to the bank, all in the name of inflation.
“So if care is not taken, we also will withdraw our service because there is no way out, everybody is struggling to get money from the bank. From 1st of next month, we will withdraw services if nothing is done.
“When we look at these issues, we will know that our refineries are important to us. It is very important for the government to declare a state of emergency on refineries, not just importation,” he said.
