• Wed. Jun 12th, 2024

MEMAN Raises Concerns Over Dollarization Policy’s Impact On Downstream Sector Investments

The Major Energy Marketers Association of Nigeria (MEMAN) has expressed apprehensions about the detrimental effects of the current foreign exchange market intricacies on the country’s petroleum products distribution and supply chain. In a media forum on Thursday, MEMAN highlighted the challenges posed by the perplexity of the forex market, affecting its members’ ability to engage in Premium Motor Spirit (PMS) or petrol importation.

Clement Isong, the Executive Secretary of MEMAN, stated that the forex market uncertainty makes it challenging to accurately calculate the landing cost of petroleum products, further complicating the determination of appropriate pump prices. He emphasized that their investments are not fully shielded due to the dollarization of certain charges, particularly those imposed by the Nigeria Ports Authority (NPA) and the Nigerian Maritime Administration and Safety Agency (NIMASA).

Isong noted that while marketers receive products from the Nigerian National Petroleum Company Limited (NNPCL) in naira, the offloading of ship-to-ship products is transacted in dollars, contributing to the escalation of pump prices. Expressing concern for sustainability, efficiency, and affordability of energy for Nigerians, MEMAN advocates for a shift towards energy transition, specifically into the gas space.

Isong criticized the dollarization policy, attributing the weakening industry and discouragement of investments to the fluctuating dollar movement and its unpredictability. He pointed out that, despite the Federal Government’s intervention process after exiting the petrol subsidy regime, the dollarization policy remains a significant challenge.

Analyzing the forex market’s impact, Isong highlighted the rising cost, citing examples where the removal of subsidy in 2023, combined with the current exchange rate, has substantially increased the pump prices. He underscored the Association’s ongoing advocacy for leveraging gas as an alternative energy source.

Femi Fanoiki, a consultant on Liquified Petroleum Gas (LPG), emphasized efforts towards driving LPG application in both industrial and automotive services. While acknowledging government interventions in encouraging investment in the gas space, Fanoiki stressed the need for additional infrastructure deployment to boost adoption.

Adelanke Bayo-Adepoju, a Gas and Renewable Energy Specialist at MEMAN, elaborated on the benefits of Compressed Natural Gas (CNG) as an alternative to petrol. She highlighted ongoing efforts to convert approximately 1 million vehicles to run on CNG by 2027, along with the establishment of over 1,000 conversion workshops nationwide.

Addressing concerns about the return of subsidy, Isong clarified that the industry experiences consistent government intervention initiatives, which should not be misconstrued as subsidy payments. He referenced President Tinubu’s commitment to monitoring inflation and exchange rate movements, ensuring interventions for market stability while encouraging a shift to affordable energy options.

Hyacinth Beluchukwu Nwafor

Hyacinth Beluchukwu Nwafor is a seasoned journalist and the CEO/Founder Belch Digital Communications, publishers of Hybrid News Nigeria.

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