By Ayo Yusuf
Nigerians woke up Tuesday morning to the shocking news that they would now pay N617 per litre of petrol, up from N537 in Abuja and it’s environs the previous day.
The Nigeria National Petroleum Company Limited, NNPCL, abruptly changed the price at its filling stations all over the country, forcing other marketers to do the same.
The national oil company has not given any reason for the latest price increase, making it the second time it has raised petrol price since May 29 when President Bola Tinubu announced the full deregulation of the downstream sector of the Nigerian oil and gas industry.
Although no official reasons were given for the price increase, The New Diplomat gathered that the sudden increase was not unconnected with the falling price of the Naira against the dollar.
Since Nigeria largely imports practically all the fuel used by motorists in the country, the dwindling value of the Naira has apparently put pressure on fuel importers, especially the NNPC Limited and independent marketers.
Commenting on the development, the National President of the Independent Petroleum Marketers Association of Nigeria, Chinedu Okoronkwo, on Tuesday gave reasons for the sudden hike in the pump price of petroleum products in Nigeria.
Mr. Okoronkwo who blamed the spike on the cost of dollars explained that, “Today the dollar is around N800 and in a deregulated regime, what determines the price of anything is the cost. The product is not refined here, everything is imported.”
Also speaking about the new price, the operations controller of the Independent Marketers Association of Nigeria, IPMAN, Mike Osatuyi, said: “It is not about the NNPC Limited. It is about the market fundamentals. Every marketer stands alone with its different cost elements. The low value of the Naira is currently impacting the market. It is now more than N800 to a dollar.
“This is why the market is responding this way. It has to spread because as operators, our price depends on our cost.
“Even though some importers have been able to import the product, it cannot be cheap because it is based on the current market fundamentals, especially foreign exchange. The public should also know that importers source their foreign exchange from the banks at the current rate.”
Our reporter gathered that each operator is now allowed to change the price of pms based on its cost elements, under the present deregulation.
Meanwhile, checks by our reporters show that many motorists have rushed to buy petrol as news of the price hike began to spread to other cities, including Lagos and environs, where some filling stations quickly adjusted their pumps to over N600 per litre.
The NNPCL had sold its product for N565 even as other stations sold higher although before today its stations mostly sold fuel sold at between N484 to N488.
In its stations in Abuja where the NNPC previously sold petrol at N539 per litre, it has adjusted the price to N617 per litre with other stations selling even higher.
Rising Pump Price, Rising Inflation
The increase in price is the second significant jump in the price since the beginning of President Tinubu’s administration, initially going from below N200 per litre at NNPC outlets and many stations across the country to the N500 range.
The fuel price jump had been followed with the free float of the naira in line with President Tinubu’s promise of harmonising various exchange rates. The naira float has seen the currency plunge from below N500 per dollar on the official exchange windows to a record low of above N800 naira.
Economists have predicted that both development will negatively affect the price of goods, a prediction that has been borne out by the latest inflation figures released by the country’s bureau of statistics.
On Monday, the National Bureau of Statistics reported that Nigeria’s Consumer Price Index (CPI) rose to 22.79% in June from the 22.41% recorded in May 2023.
Nigerians who have laboured under the misapprehension that with more marketers allowed to import petrol the price would eventually fall were shocked by the recent development.
The fact that the price hike is coming soon after the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) announced that oil marketers have commenced the importation of petrol was especially surprising.
The Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA, Farouk Ahmed, who revealed this on Monday during a stakeholder engagement in Lagos, said of the 56 oil marketing companies that applied for and obtained licences, 10 indicated their ability to import in the third quarter of 2023, while three had “landed cargo”.
Ahmed listed the three companies currently importing the product to include, A.Y. Ashafa, Prudent Energy, and Emadeb, adding that others would import between August and September.
He added, “We have now about 56 companies that applied for and obtained licence to import Premium Motor Spirit.
Out of those, about 10 indicated their ability to import in the third quarter (July, August and September).”
This development is coming seven weeks after President Bola Tinubu’s May 29 inaugural address, during which he declared that “fuel subsidy is gone”.
N500bn Palliative
With the attendant difficulties faced by Nigerians due to increase in price of commodities occasioned by the removal of the petrol subsidy, the Tinubu-led administration had applied for N500 billion palliative to cushion the effect.
The President in his letter to the House of Representatives last week, had proposed to give N8,000 to 12 million households within six months.
According to the President, the money transfer to poor households would have a multiplier effect on about 60 million individuals.
For credibility, the President said the money will be transferred to the households digitally.
Members of the House of Representatives subsequently amended the 2022 supplementary appropriation act and approved President Tinubu’s request to source for 500 billion naira from the approved budget to provide palliatives for Nigerians following the removal of petrol subsidy.
