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2 Big Reasons Why Petrol Price Will Never Reduce - Eledalo! - Politics - Nairaland

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FG May Increase Petrol Price To N180 Per Litre / Why Petrol May Not Sell At N145 Anytime Soon / Petrol Price Will Crash In One Month — Marketers (2) (3) (4)

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2 Big Reasons Why Petrol Price Will Never Reduce - Eledalo! by eledalo: 7:33pm On May 11, 2016
As the word gets out about the removal of petrol subsidy and subsequent increase in PMS pump price, Nigerians are bracing for the unavoidable increase in the price of all goods and services, as is the norm.
However, despite assurances of reduction in PMS price over time, this may most likely never happen for the following reasons:

1. Marketers will source their own dollars: Petroleum Minister of State Ibe Kachikwu announced that Marketers will have to source their own dollars to buy PMS. i.e. Dollars will not be sold to them at CBN rate of N200. Nairaland's daily update of exchange rates lets us know that $1 trades for upwards of N300. For those who don't know, PMS is traded internationally in US Dollars. This means Petrol Marketers will have to spend Dollars to buy this product from traders/refineries abroad, and then come and sell in Naira. Having bought Dollars for N300, will they come back and make a loss? You guess is as good as mine.

2. No matter the price of a barrel of oil, the price remains the same: Despite the rise and falls of crude oil prices from time immemorial, the price of petrol, diesel and kerosene has never come up or down in response to the crude oil price! Instead, it slowly and constantly creeps higher every single year. Diesel was deregulated in 2009 and sold for about N90 (See pic below). Today diesel retails for between N125-135 per litre. Why has the price been going up consistently?

Solutions: 1. CBN dollar monopoly must be halted! Surely it benefits many CBN heads from (now) Saint Sanusi to Soludo but you cannot have one body determining who gets a critical business resource, especially in an import dependent economy like Nigeria's. Henry Boyo's writings are instructive here.

2. Deregulation should only occur when there is sufficient and diverse local refining capacity. If multiple companies are able to refine they will be required to sell at a competitive prices, just to stay in business.

3. Remove a regulator like PPPRA setting or suggesting prices: PPPRA also releases 'templates' to guide petroleum prices. This is similar to pure water which sells for N10 regardless of manufaturer. Little known to the public, ATWAP (Association of Table Water Producers) actually sets the price in Nigeria and enforces it! ( Read this and be educated https://www.nairaland.com/418542/pure-water-biz-discuss/20 ) How can there be a free competitive market with marketers forced to retail at 'not above N145?

4. God bless Nigeria!

Re: 2 Big Reasons Why Petrol Price Will Never Reduce - Eledalo! by emorse(m): 7:46pm On May 11, 2016
What exactly are we doing differently now? Asides the corruption war, I don't see much else. I'm still hopeful though.
Re: 2 Big Reasons Why Petrol Price Will Never Reduce - Eledalo! by braithwaite(m): 7:54pm On May 11, 2016
undecided

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