Expect Increase In Fuel Prices, Oil Marketers Tell Nigerians

Oil marketers have urged the populace to expect an increase in the price of Premium Motor Spirit, also known as petrol.

This is due to the increase in the price of crude oil and the decline in the value of the naira relative to the US dollar.

It was learned that the Federal Government had gradually increased the sum secretly spent as a petrol subsidy as a result of the dramatic increase in crude oil prices to roughly $94 per barrel and the FX crisis.

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Operators argued on Sunday that the government was administering a quasi-subsidy despite the Federal Government and its NNPCL insisting that petroleum subsidies had stopped as a result of the liberalization of the downstream oil sector.

The Punch reports that Brent crude rose to $94/barrel on Sunday, the highest figure in 2023. Oil had started the year at about $82/barrel, dipped to $70/barrel in June, but traded above $92/barrel in the past week.

The National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, in a statement on Sunday said, “The Group Chief Executive Officer of NNPC, in one of his statements, had pointed out that as long as the dollar continues to rise, Nigerians should not expect petroleum products prices to be pegged, The Punch reports.

“The cost of crude oil is also on the rise and it impacts on petrol price, because PMS is derived from crude.

“So in this price deregulation regime, once the dollar increases, automatically it means that the cost of importing petroleum products will also increase. And the cost of every other related service will rise.

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“So the fuel we are buying today at N617 or N596 depending on where you buy it and based on the nearness to depots, is actually below what the price should really be, going by the rise in dollar and crude oil price.

“I said earlier that what we are experiencing now is quasi-deregulation. The rise in crude oil price has both positive and negative effects on Nigeria. It is positive because it increases our generation of dollars when we sell the crude.

“But it is negative in the sense that we still use that dollar that we have got to import the finished products of crude. That is the problem. For if Nigeria is refining products, then there will be a windfall, but since we import with the dollar that we make, then it makes no sense.

“The gap is becoming too much. Also, the exchange rate gap between the official and parallel markets is widening. And these gaps have to be filled by the government through quasi-subsidy on petrol.

“You also know that most of the investors who tried to import products when it was announced that the subsidy on petrol had been removed, are now finding it very difficult to do so.

“This is because after buying the dollar in the parallel market, they cannot recoup what they have invested. So the government must be transparent with this subsidy removal thing. It should apply it to the fullest, so that competition can set it.”