By DOYIN OKUPE
Deregulation of the downstream oil sector is a right step in a right direction. But it does not have to come with hike in fuel price.
The Hon Minister of state announced that anyone can bring in PMS, but must source the Forex at secondary markets. Yet the government, after, assuming an exchange rate of N285/$1, pegged the price at N145 per litre.
There are unconfirmed reports that the Naira has been devalued to N290/$1. If that is the case the figure of N285 for secondary market value of naira is grossly faulted and unrealistic.
The other issue is that there I’d actual sustained and chronic shortage of dollar in the parallel market. In fact if prices were to follow demand and supply pull, the exchange rate will be somewhere over N400.
With this prevailing forex market condition, the official price of N145 is a huge joke.
The simple truth is this: there is no enough dollar to import the PMS, and even that which is available has a value that is astronomical.
The second truth is that nobody can bring in the required quantity( approx $25m per day!!!!) and when it is imported, 90% of Nigerians will not be able to afford it, at a cost of about N220 per litre!!!
The only reasonable solution is to swap the 450,000 barrels of crude oil allocated for domestic consumption, with PMS imports.
Corruption can be removed and the transaction made transparent by inviting interested marketers to bid for the 450,000 barrels openly by stating how much they will sell litres of PMS for each barrel of crude oil they are bidding for. Government then qualifies the marketers with the best offers and with financial and technical capabilities to support there bids.
This way we remove huge dollar commitment from the transaction as well as protect PMS pricing from the negative effect of our depreciating currency.
If properly packaged Nigerians can still buy PMS at below N90/ litre and government can hands off retailing petrol.