The decline of the naira against the United States dollar, combined with the recent escalation in global crude oil costs, is causing Nigerians to feel uneasy about a potential increase in the cost of Premium Motor Spirit (PMS), commonly referred to as petrol.
While no official announcements have been made by the Nigerian National Petroleum Company Limited and other oil marketers regarding a rise in petrol prices, they have acknowledged that the scarcity of foreign exchange and the surge in crude oil prices are pivotal factors influencing the PMS price.
Following President Bola Tinubu’s removal of the PMS subsidy, the petrol price escalated from N198 per litre in May to over N500 per litre in June.
In July, the cost surged even further to surpass N600 per litre, prompting concerns that it might continue to climb in August due to the weakening naira against the dollar.
On a parallel market, the naira plummeted below N900 against the dollar, and it also faced a depreciation against the US dollar at the official Importers and Exporters forex window.
Moreover, Brent, the global benchmark for crude oil, was traded at approximately $87 per barrel on Thursday, a substantial increase from its value of less than $80 per barrel just a few weeks ago.
Collins Nnabude, a resident of Abuja, expressed his apprehension, stating, “The drop in the naira’s value against the dollar and the recent surge in crude oil prices are causing concern due to their potential impact on petrol prices in Nigeria.
It’s likely that fuel prices will rise again this month.”
Oil marketers also verified the possibility of another petrol price hike in the same month.
Billy Gillis-Harry, the President of the Petroleum Products Retail Outlets Owners Association of Nigeria, urged Tinubu to take action to reactivate Nigeria’s refineries.
Gillis-Harry emphasized, “We have called for the President to declare a state of emergency for our refineries to expedite their repairs.
This is the most viable approach to regain control over the pricing of petroleum products, as at present, every purchase of PMS at a retail outlet is linked to the dollar.”
In addition, Chinedu Okonkwo, the National President of the Independent Petroleum Marketers Association of Nigeria, noted that the downstream oil sector had been completely deregulated, resulting in fluctuating costs of PMS.
Okonkwo clarified, “In a deregulated environment without subsidies, the price of petrol will either rise or fall.
However, if one aims to capitalize on the situation, competitors who offer lower prices will outcompete you.”
Oil marketers also suggested that the Federal Government might intervene due to the continuous increase in crude oil prices and ex-depot prices of petrol.
Mike Osatuyi, the National Controller Operations of the Independent Petroleum Marketers Association of Nigeria, conveyed that President Tinubu had promised intervention if necessary.
He stated, “We must first commend President Tinubu for removing fuel subsidies, as the country would have been burdened by now.
Given the rising crude oil prices, it is evident that our petrol consumption has decreased.
Simultaneously, the price of crude oil is rising, which means Nigeria will have additional funds in addition to the savings from subsidy removal.
Consequently, as petrol prices rise, we can manage the situation due to the increased funds.”
Osatuyi added, “The ex-depot price currently ranges between N585 and N590 per litre, subject to variation based on the depot.
This price may rise or fall based on crude oil prices and exchange rates.
However, the president has assured that interventions will occur as needed. We have confidence that they are closely monitoring the situation as it evolves.”
