The recent devaluation of the Nigerian naira in relation to the United States dollar, accompanied by an upswing in global crude oil prices, has sparked apprehension among Nigerians about a potential increase in the cost of Premium Motor Spirit (PMS), commonly referred to as petrol.
Although the Nigerian National Petroleum Company Limited and other oil marketers have refrained from formally disclosing any plans for a petrol price hike, they have affirmed that the scarcity of foreign exchange and the upward movement of crude oil prices are pivotal determinants of PMS pricing.
The price of petrol experienced a surge from N198 per litre in May to surpass N500 per litre in June, subsequent to President Bola Tinubu’s removal of the PMS subsidy. This cost escalated once more, exceeding N600 per litre in July, prompting concerns that the trend could persist into August given the depreciating naira against the dollar.
The naira’s value slipped below N900 against the dollar within the parallel market, while also witnessing a decline against the US dollar within the official Importers and Exporters forex window. Simultaneously, Brent, the global benchmark for crude oil, surged to approximately $87 per barrel on Thursday. This starkly contrasts with its value of less than $80 per barrel just a few weeks earlier.
Abuja resident Collins Nnabude voiced his apprehension, remarking, “The devaluation of the naira against the dollar and the recent surge in crude oil prices are causing concern when we consider their potential impact on petrol prices in Nigeria. It’s quite likely that fuel prices will rise once again this month.”
Oil marketers have echoed the prospect of another imminent petrol price increase.
Billy Gillis-Harry, President of the Petroleum Products Retail Outlets Owners Association of Nigeria, emphasized, “As long as the naira continues to weaken against the dollar, the price of petrol at our retail outlets will invariably continue to rise.”
Gillis-Harry urged President Tinubu to prioritize the revival of Nigeria’s refineries.
He asserted, “We have requested that the President declare a state of emergency for our refineries to expedite their restoration. This stands as the most assured approach to stabilizing petroleum product prices, as presently, every liter of PMS purchased at any retail outlet is influenced by the dollar.”
Addressing the situation, Chinedu Okonkwo, National President of the Independent Petroleum Marketers Association of Nigeria, clarified that the downstream oil sector had undergone full deregulation. Consequently, the price of PMS would be subject to fluctuations.
Okonkwo explained, “In a deregulated environment without subsidies, the petrol price will either rise or fall. However, those aiming for profiteering should be aware that those who offer lower rates will outcompete them.”
Moreover, oil marketers indicated that the Federal Government might intervene, given the persistent increase in crude oil prices and the ex-depot price of petrol.
Mike Osatuyi, the National Controller Operations of the Independent Petroleum Marketers Association of Nigeria, disclosed that President Tinubu had committed to intervention, if deemed necessary.
Osatuyi acknowledged, “We must extend our gratitude to President Tinubu for the removal of fuel subsidies, which has prevented substantial burdens for the country. In light of the ascending crude oil prices, we have observed a reduction in petrol consumption. Simultaneously, the cost of crude oil is on the ascent, signifying that Nigeria will experience augmented revenue in addition to the savings from subsidy removal. This heightened financial pool unavoidably contributes to the ongoing hike in petrol prices.”
He further commented, “The ex-depot price currently varies between N585 and N590 per litre, contingent on the depot. This figure may fluctuate based on crude prices and exchange rates. However, the President has affirmed that interventions will be executed when warranted. We hold confidence that authorities are closely monitoring the unfolding situation.”
