Another fresh petrol price set to be announced

Market forces have said that Premium Motor Spirit (PMS) popularly known as petrol will soon sell for N720 per litre.

This unwelcome development comes as Nigerians are still grappling with the aftermath of recent increases in the cost of living and transportation following a recent hike in petrol prices by the Nigerian National Petroleum Corporation (NNPC) Limited.

Insiders in the oil sector have revealed to the media that there are strong signals pointing towards yet another escalation in the pump price of petrol. If this unfolds, it would mark the third increase within a span of just ten weeks.

Reports suggest that the cost of landing petrol has surged by a staggering 37.4% on a month-on-month basis, reaching an unsettling N632.17 per litre in July 2023, as opposed to N460 per litre in June 2023.

This doesn’t even account for additional expenses such as depot-related charges, transportation logistics, and marketers’ margins, which together could push the delivery price at filling stations to nearly N700 per litre.

The factors driving these rising costs are expected to further intensify, with sources indicating that the landing cost for August is poised to rise even higher due to ongoing issues like foreign exchange scarcity and deteriorating exchange rates.

With the Nigerian government’s removal of fuel subsidies, it’s uncertain whether fuel prices will stabilize anytime soon.

Compounding the situation, the Nigerian currency, the Naira, has experienced a significant depreciation—around 6.5% in the official market and 25% in the parallel market since the last petrol price increase.

This depreciation, combined with the climbing price of crude oil on the international market, has led to higher costs for fuel imports.

Marketers have expressed their concerns about the unprofitability of importing fuel at the current pump price, while the government has yet to assure a free-floating pump price policy.

In fact, the Nigerian National Petroleum Company Limited (NNPCL) has essentially become the sole importer, apart from a few minor private imports recorded in the past month.

The situation appears to be worsening as Nigeria’s crude oil output declines, posing a threat to the nation’s ability to import refined products.

In its August 2023 Monthly Oil Market Report (MOMR), the Organization of the Petroleum Exporting Countries (OPEC) highlighted a decrease in Nigeria’s oil production by 6.5% on a year-on-year basis and 3.0% on a month-on-month basis.

As a consequence of these developments, the National Operations Controller of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mike Osatuyi, has indicated that Nigerians should brace for higher fuel prices in the coming days.