- Petrol prices are set to increase even further in the coming days and could rise to as high as N720 per litre
- Already, at N600 per litre Nigerians are finding it difficult to afford essential commodities and transportation in their day-to-day lives
There are strong indications that petrol stations across the country are set to increase the pump prices of Premium Motor Spirit (PMS), popularly called petrol in the coming days, adding to the burden of already stretched Nigerians.
The proposed new pump prices are set to be adjusted from the current N580 and N617 per litre to around N680/litre and N720/litre.
If implemented, the new round of increases will be the third within 10 weeks since the announcement of the removal of the petrol subsidy.
It has been speculated why the prices are set to increase anytime soon.
No more subsidy
One primary reason for the changes in petrol prices is the removal of subsidy on petroleum products in Nigeria.
It would be recalled that President Bola Tinubu in his inaugural speech, had announced the removal of the subsidy, opening the doors for market forces to determine pump prices.
This no-subsidy regime implies that Nigeria is now exposed to international oil prices.
Global crude oil prices
One primary reason petrol prices are increasing is the rise in global crude oil prices. Therefore, when crude oil prices increase, Nigerians.
Brent crude, the international oil price benchmark, increased from $76 per barrel in June 2023 to $86 per barrel as of Monday, August 14. This means Nigerian oil marketers looking to restock will have to pay more to import.
Reports have it that the landing cost of petrol has risen month-on-month, MoM, by 37.4% to N632.17 per litre in July 2023, from N460 per litre in June 2023.
Naira depreciation
Since the last pump price increase, Naira has depreciated against the US dollar by about 6.5 percent in the official market and 25 percent in the parallel market.
Chinedu Okoronkwo of the Independent Petroleum Marketers Association of Nigeria (IPMAN) confirmed the imminent price increase due to naira depreciation.
His words: “As long as the dollar keeps rising against the naira in the foreign exchange market, the price of fuel in the country will continue to increase.”
If the exchange rate continues to hover between N910 to N950 per dollar in the parallel market, and closer to N800 in the official market, the price of petrol is expected to rise.
Scarcity of Foreign Exchange
Oil dealers seeking to import petrol are facing a need for more foreign exchange (forex) to facilitate the importation of petrol.
The forex shortage prevents dealers from securing the necessary forex for the commodity.
Other reports have it that oil marketers are now considering halting importation over the difficulty of getting forex.
If this happens, it will leave only NNPC as the sole importer and could lead to other marketers who manage to secure the product to raise prices.
Meanwhile, in another report has revealed that global crude oil is now nearing $90 per barrel and is trading at the highest since 2023.
While the increase should be good news for oil-producing country like Nigeria, it is not good news for its citizens.
Not only is Nigeria still struggling to meet its production quota, but the removal of the fuel subsidy and inactive refineries foretell an increase in petrol pump prices.
SOURCE: Legit.ng