Fuel Prices: As Crude Oil Hits $93.50, Uncertainty Looms

Concerns about a further increase in the price of gasoline in Nigeria have grown as a result of the ongoing increase in the price of crude oil on the global market.

On Monday, the commodity went for $93.55 per barrel.

The shift coincides with the Naira's decline at the foreign exchange window, where Monday's parallel market exchange rate was N980 to $1.

However, due to the growing price of crude oil on the international market and the free-fall of the Naira at the FX window, the Independent Marketers Association of Nigeria, or IPMAN, and the Major Oil Marketers Association of Nigeria have allayed concerns about a potential increase in the price of gasoline.

 Remember that there have been two fuel price increases in the last three months.

The pump price was revised upward by 200% to N546.83 per litre from N175/per litre in June after the gasoline subsidy was eliminated. The price of gasoline at the pump was raised from N546.83 to N617 per litre less than a month later.

Despite the steady decline in the value of the Naira on the foreign market between July and September, there was no impact on fuel increments.

According to Ajuri Ngelale, the president's special adviser on media and publicity, the development is in response to President Bola Ahmed Tinubu's commitment to Nigerians that there won't be any additional increases in petrol pump prices.

"We repeat, the President affirms that there will be no increase in the price of petroleum motor spirit," he said.

Tinubu's assurance was echoed by Mele Kyari, Group Chief Executive of Nigerian National Petroleum Corporation Limited.

NNPC limited has been the only distributor of the good nationally, with the exception of July, when Emadeb Energy imported 27 million litres of fuel into Nigeria.

The Federal Government is said to have indirectly subsidized the good in order to prevent a further increase in the pump price.

The increase in fuel prices, according to IPMAN President Chinedu Okonkwo, is not a cause for concern.

The Nigerian National Petroleum Corporation Limited, he claimed, is the only source of gasoline in the entire country and has not put up an increase strategy.

Okonkwo clarified that fuel distributors buy their goods in naira.

He encouraged the federal government to move more quickly to ensure that compressed natural gas is adopted as a practical fuel substitute.

"We are getting fuel products from our source, the NNPCL Retail. NNPCL has not told us that the price of fuel will change; I should not speculate on price increments.

"I think we have NNPCL that solely gives us products. The market fundamental determines the price; if NNPC decides to increase the fuel pump, we will also change.

"For now, there is nothing to worry about. The same reason the price could go up, it can also come down. NNPCL can do anything to remain in business. No marketer should complain of dollar scarcity because they are not importing PMS. NNPCL is the sole importer for now.

"Government should include stakeholders like IPMAN into the Compressed Natural Gas initiative; that is the way out", he said.

Additionally, Tunji Oyebanji, a former chairman of MOMAN, said that NNPCL, the country's sole supplier, determines the price in a unique, unregulated market for fuel.

In his opinion, the price of the good may likely stay the same in the interest of the majority of Nigerians so long as NNPCL continues to be the country's sole supplier and importer of fuel.

"We are operating in a deregulated market in a peculiar situation, because the company importing fuel to Nigeria is only the NNPCL.

"If I want to import, the landing cost may be higher than the prevailing market price. As a result, only NNPCL can import at this time.

"That means that they indirectly set the price in the market since they are the sole importer.

"They are suppliers to the entire market and, at the same time, a retailer. So, NNPCL's price is going to be an indication of what the market is saying today in the country.

"Because we are operating in a market with a single supplier, that supplier will determine the product's price. There may be a price increase if fuel importers other than NNPCL enter into the supply chain market," he stated.