Yusuf Othman, President of the National Association of Road Transport Owners (NARTO), has attributed the naira’s recent performance against the U.S. dollar to a decline in the need to import petroleum products. He explained that the local availability of petroleum products, combined with the fact that they can be purchased in naira, has reduced demand for foreign exchange within the petroleum distribution sector. This has eased some of the pressure that previously arose from using foreign currency to finance imports.
Othman made the comments during an interview on Channels Television’s The Morning Brief.
According to him, the development has also created difficulties for road transport owners who specialize in distributing petroleum products. He said many NARTO members currently have little or no work because fewer transportation services are required under the prevailing arrangement.
Othman linked the situation to the activities of one of the refineries, which he said had been distributing petroleum products free of charge. By making the products available without a transportation cost to buyers, the refinery has reduced the need for the services traditionally provided by petroleum product transporters.
The NARTO president further explained that the rates paid to transport companies are generally predetermined and apply uniformly to operators. As a result, transportation charges remain relatively small when compared with the overall pump price of petroleum products, limiting the extent to which transporters can benefit from increases at the filling station.
Commenting on the recent rise in the pump price, Othman attributed the increase to developments in the Middle East. He noted that the situation had affected several other countries as well, reflecting the broader impact of instability in the region on petroleum prices and supply conditions.
He, however, said the consequences had not been as severe in some of those countries because they maintained strategic reserves. According to him, such reserves helped those countries cushion the effect of external disruptions and reduce the immediate pressure on domestic petroleum prices.
Othman said Nigeria has several government depots located across the country and had previously maintained strategic reserves to help cushion the effect of disruptions in supply and sudden changes in market conditions. He added, however, that, to the best of his knowledge, most of those reserves are currently empty.
He said the depletion of the reserves means Nigeria must rely on petroleum products brought into the country, leaving the domestic supply chain exposed to several influencing factors, including availability, logistics, international market conditions and other developments that can affect the movement and cost of the products.
The NARTO president said discussions had been held with the current government on measures to establish the necessary structures, rebuild the country’s reserves and reduce the likelihood of future fluctuations in petroleum product prices.
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