Expect A Rise In Fuel Prices While FG Continues To Practice Quasi-Subsidies - Oil Marketers

Fuel Pump

Expect another increase in the price of gasoline at the pump, Nigerians have been warned.

This is a result of both the naira's depreciation versus the US currency and the increase in the price of crude oil.

Oil marketers said that over 80% of the price of PMS was determined by the price of crude oil and the dollar's value in relation to other currencies.

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.

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 subsidies on gasoline had terminated as a result of the liberalization of the downstream oil sector.

They emphasized that if the government insists on keeping the product at N617/litre, then subsidy on PMS has been quietly restored. They noted that with the most recent increase in crude oil price, the cost of gasoline was expected to climb.

In a statement released on Sunday, the National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, stated: "The Group Chief Executive Officer of NNPC had pointed out that Nigerians should not expect petroleum product prices to be pegged as long as the dollar continues to rise.

"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.

"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."