According to oil marketers, the price of Premium Motor Spirit, also known as petrol, could increase at the pump due to the rising cost of crude oil and the naira’s depreciation versus the US dollar.
Additionally, it was learned that the Federal Government had gradually increased the amount 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.
Over 80% of the price of PMS was determined by the price of crude oil and the dollar’s value at the time, according to downstream oil dealers.
The price of Brent crude, the world’s standard for oil, increased to $94 a barrel on Sunday, the highest level since 2023. Oil started the year at around $82/barrel, fell below $70/barrel in June, but has recently traded above $92/barrel.
Foxiz Nigeria also said on Thursday that as foreign exchange shortages increased, the value of the naira fell to N950 to the dollar.
According to the report, the naira lost more ground versus the dollar on Wednesday after ending at 950/$ on the parallel market.
The naira, which had previously closed at 930 per dollar at the close of business on Tuesday, was purchased and exchanged between 935 per dollar and 950 per dollar on Wednesday, Bureau de Change operators had previously told Foxiz Nigeria.
Operators argued on Sunday that the government was administering a quasi-subsidy even though the Federal Government and the Nigerian National Petroleum Company Limited had insisted that the subsidy on fuel had stopped as a result of the liberalisation of the downstream oil sector.
They emphasised that if the government insists on keeping the commodity at N617/litre, then subsidy on PMS has been quietly returned. They noted that with the most recent increase in crude oil price, the cost of petrol was expected to climb.
The marketers said that in July, when the price of fuel was increased to N617 a litre, crude oil traded at about $82 per barrel, while the parallel market exchange rate was just N950.
The Nigerian Association of Road Transport Owners echoed the worries of marketers, stating that it had been difficult for them to comply with NARTO’s demands over raising the cost of transportation for petrol due to the price cap on petrol.
“The Group Chief Executive Officer of NNPC had noted that Nigerians should not anticipate petroleum product prices to be pegged as long as the dollar continues to grow in one of his utterances. Because PMS is made from crude, the price of crude oil is also rising, which has an effect on the price of petrol.
Therefore, under this regime of price deregulation, the price of importing petroleum goods will automatically rise as soon as the value of the dollar rises. The National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, predicted that the cost of every other associated service will also increase.
Therefore, the fuel we are purchasing today at N617 or N596 depending on where you buy it and how close the depots are, is actually cheaper than it should be given the growth in the value of the dollar and the price of crude oil, he continued.
The increase in crude oil prices, according to Ukadike, would improve Nigeria’s earnings from foreign exchange, but the money was being used to import refined goods.
“As I mentioned earlier, the situation we are in presently is one of quasi-deregulation. Nigeria is impacted by the rising price of crude oil in a positive and bad way. It is advantageous since it raises the amount of money we generate when we sell the crude.
However, it is detrimental because we continue to import crude’s completed goods with our remaining dollars. The issue is that. Because there would be a windfall if Nigeria were to refine items, but because we import with the money we earn, it makes no sense.
When asked if the increase in oil prices will call for more increases in PMS and other finished product costs, raising the subsidy on petrol in particular, Ukadike responded, “Of sure.
“The disparity is getting out of hand. Additionally, the difference in exchange rates between the official and unofficial markets is growing. And the government must bridge these gaps by providing a fictitious subsidy on petrol.
“You also know that the majority of investors who attempted to import goods after the removal of the petrol subsidy was announced are now having a very tough time doing so.
“This is because they are unable to repay their investment after purchasing dollars on the black market. Therefore, while removing subsidies, the government must be open and honest about it. It should utilise it fully so that competition can determine it.
While the price of crude has been rising recently, according to Billy Gillis-Harry, President of the Petroleum Products Retail Outlets Owners Association of Nigeria, the NNPCL should be able to control it for the benefit of Nigerians with regard to petroleum product prices.
“Crude oil is selling at a higher price, and that price should have a good effect since the biggest importer of petroleum products is the NNPC, and unless they are informing us that the swap is inefficient, they do so on a swap basis.
“Because if it’s effective, they ought to make more money every unit of crude oil they sell, which would have an effect on the price they charge Nigerians. Yes, it operates as a business today, but Nigerians continue to own it and it is a sovereign entity.
“And the price of items by NNPC should reflect the fact that Nigerians must profit from their natural endowment by God. That’s all I have to say about this,” he said.
The National Secretary of IPMAN, Chief John Kekeocha, had earlier urged the Federal Government to be transparent on fuel subsidies rather than requiring oil marketers to stop selling the product above a predetermined range.
President Bola Tinubu had directed that the price of petrol should not increase, according to Ajuri Ngelale, the Special Adviser to the President on Media and Publicity, who spoke to reporters at the State House in August.
“Mr. President, wishes to reassure Nigerians following the NNPC Limited’s announcement made just yesterday (Monday) that there will be no increase in the pump price of PMS anywhere in the country. We reiterate, the President affirms that there will be no increase in the pump price of PMS.”
