Economy
Why It’s Impossible to Sell Petrol Below N800 per Litre—NNPC
By Dipo Olowookere
The hope of Nigerians getting premium motor spirit (PMS), commonly known as petrol, below N800 per litre, at least for now when the price of crude oil is less than $80 per barrel and the official exchange rate of the Naira to the Dollar is above N1,600/$1 at the currency market, may have been dashed.
This is because the Chief Financial Officer (CFO) of the Nigerian National Petroleum Company (NNPC) Limited, Mr Adedapo Segun, has said the price of the commodity from unrefined crude oil is about N800 per litre.
He made this revelation while speaking on Channels Television’s Sunrise Daily on Wednesday, monitored by Business Post.
According to him, this reality might make it impossible for the company to sell PMS to Nigerians at that price because the cost of getting the final product must be added to arrive at the actual price of petrol.
“This pricing conversation is an interesting one. What are the components of the price? I just told you that the crude [oil] unrefined is N800 per litre, a barrel of crude is about $80 (actually at $72 per barrel as of Wednesday), give or take, you have about 159 litres [of PMS) in a barrel of crude, let’s approximate it to 160 litres, that gives you 50 cents per litre [and] at N1,600 per Dollar, that’s N800 per litre.
“So, the crude itself, unrefined, is N800 per litre. Then you talk about the refiner’s margin, he has to make some money and has costs like operating the plant and other overhead costs. When you are done with these costs, you move to the wholesalers.
“[The product] is transported either by vessel or trucks. The transporter also has his margin as well as the retailer. There are also costs for the regulators and other statutory fees to be paid.
“When you look at all of these costs, what will the Port Harcourt refinery do differently than what Dangote Refinery for example is doing today?
“The only difference would be that it is closer to the people of Port Harcourt and reduces the cost of transporting things like PMS from Dangote Refinery in Lagos to Port Harcourt. That is where the savings would come, but that is very marginal. The cost of transportation is very marginal in the cost-build-up for PMS,” he said.
However, he noted that what the refineries will do to Nigeria is to create competition based on market conditions.
At the moment, the price of PMS at NNPC retail stations is N1,025 per litre in Lagos, while independent marketers sell between N1,040 per litre and N1,060 per litre.
Last week, Dangote Refinery announced a slash in its ex-depot price to N970 per litre from N990 per litre.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange closed the midweek session with a 0.88 per cent depreciation after the duo of FrieslandCampina Wamco Nigeria and UBN Property Plc suffered losses.
The market capitalisation lost N9.31 billion to close at N1.053 trillion compared with the previous session’s N1.063 trillion and the NASD Unlisted Security Index (NSI) recorded a slide of 26.54 points to end the day at 3,006.38 points as against 3,032.92 points it recorded at the previous session.
The volume of securities traded at the bourse witnessed a surge as investors exchanged 1.0 million units, which is 208.4 per cent higher than the 327,425 units transacted by market participants at the last session.
However, the day’s trading data showed that the total amount of stocks traded at the midweek session slid by 86.9 per cent to N2.1 million from the N15.7 million quoted on Tuesday.
These transactions were completed in three deals compared with the nine deals carried out a day earlier, representing a decline of 66.7 per cent.
FrieslandCampina Wamco Nigeria shed N4.39 yesterday to trade at N39.51 per unit versus Tuesday’s closing price of N43.90 per unit and UBN Property Plc recorded a 13 Kobo depreciation to sell at N1.67 per share, in contrast to the preceding session’s N1.80 per share.
At the close of business, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units worth N3.9 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.3 million units sold for N5.3 million.
Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, Okitipupa Plc came next with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc was in third with 297.3 million units sold for N5.3 billion.
By Adedapo Adesanya
The Naira weakened against the Dollar by 0.08 per cent or N1.39 to N1,660.83/$1 in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday, November 27, from the preceding day’s value of N1,659.44/$1.
However, the value of the domestic currency remained stable against the Pound Sterling and the Euro in the official market yesterday at N2,116.44/£1 and N1,788.98/€1.
It was observed that the FX turnover for the trading session went down by 20.9 per cent or $88.91 million to $337.07 million from the $425.98 million recorded a day earlier, according to data obtained from FMDQ Securities Exchange.
As for the black market, the exchange rate of the Nigerian Naira to the US Dollar remained unchanged at the midweek session at N1,750/$1, according to data harvested by Business Post.
Speaking at the end of the 298th Monetary Policy Committee (MPC) meeting, the Governor of the Central Bank of Nigeria (CBN), Mr Yemi Cardoso, said the apex bank remains committed to its core mandate of price and exchange rate stability in anchoring inflation.
“Members thus focused on the optimal policy choice to address the uptrend in price development, stabilize the exchange rate and anchor inflation expectations appropriately,” Mr Cardoso said.
In the cryptocurrency market, prices were largely positive for benchmarked tokens ahead of Thanksgiving weekend in the US which has historically recorded sudden price dumps.
Rising activity and a bump in revenue, fees, new wallets and on-chain volumes have also indicated further support for digital assets, which has gained support from an expected friendly environment in the US next year.
Ripple (XRP) grew by 7.4 per cent to $1.47, Binance Coin (BNB) appreciated by 5.3 per cent to $650.61, Ethereum (ETH) rose by 4.9 per cent to $3,571.110, Cardano (ADA) expanded by 4.4 per cent to $1.00, Solana (SOL) jumped by 3.4 per cent to $237.39, Dogecoin (DOGE) increased by 3.1 per cent to $0.4035, Bitcoin (BTC) went up by 2.6 per cent to $95,288.95 and Litecoin (LTC) gained 2.4 per cent to settle at $64.89, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) traded flat at $1.00 apiece.
By Adedapo Adesanya
Oil prices slid marginally on Wednesday, fuelled by a build in US petroleum stocks and worries about US interest rate cuts next year, with Brent crude futures losing 2 cents to trade at $72.83 a barrel and the US West Texas Intermediate (WTI) crude shedding 5 cents to sell for $68.72 per barrel.
Data from the Energy Information Administration (EIA) said US gasoline stocks rose by 3.3 million barrels in the week to 212.2 million barrels, indicating a decline in demand.
Crude stocks fell by 1.8 million barrels in the week ended November 22, the EIA added, countering the American Petroleum Institute (API) which said on Tuesday that oil inventories fell by 5.94 million barrels and fuel inventories rose last week.
Slowing fuel demand growth in top consumers the US and China have weighed heavily on oil prices this year, although supply curtailments from the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ have limited the losses.
OPEC+ will meet on Sunday, December 1 and there is an increasing possibility that members have been discussing a further delay to a planned oil output hike that was due to start in January.
OPEC+ which produces about half of the world’s oil, had aimed to gradually ease production cuts through 2024 and 2025, but weaker global demand and rising output outside the group have cast doubt on that plan.
The market is also expecting the US Federal Reserve to lower borrowing costs by 25 basis points at its December 17-18 meeting.
However, there is also anticipation that the US central bank will leave rates unchanged at its meetings in January and March.
Prices drew support from concerns about supply eased after a ceasefire deal between Israel and Hezbollah brokered by the US and France.
The ceasefire started on Wednesday and helped ease concerns that the conflict could disrupt oil supplies from the top-producing Middle East region.
Market participants are uncertain how long the break in the fighting will hold, with the broader geopolitical backdrop for oil remaining.
There is also an increased possibility that oil may not be exempted from the 25 per cent tariffs that incoming US President Donald Trump has threatened to impose on all products coming into the US from OPEC+ member Mexico and Canada.
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