Fuel Subsidy Removal: NNPCL Hikes Petrol Price to N1,060

Petrol Price Hits N1,060/Litre

The consecutive price hikes have raised fears about the impact on the economy...

Nigeria Fuel Price Hike: Petrol Now N1,060/Litre in Abuja, N1,025/Litre in Lagos Amid Deregulation

The Nigerian National Petroleum Company Limited (NNPCL) implemented a significant price adjustment for Premium Motor Spirit (PMS), or petrol, on October 29. The pump price in Abuja rose from N1,030 to N1,060 per litre, while Lagos saw an increase from N998 to N1,025 per litre.

This latest hike marks the third price increase within two months, sparking widespread criticism from the Organised Private Sector, Civil Society Organizations, and the general public. The concerns centre around the potential exacerbation of Nigeria's already soaring inflation rate, which reached a 28-year high of 34.2% in June.

The consecutive price hikes have raised fears about the impact on the economy, businesses, and households. Stakeholders worry that the increased fuel costs will trickle down to other essential goods and services, further straining the purchasing power of Nigerians.

Aliko Dangote, President of Dangote Group, recently expressed frustration over Nigeria's continued reliance on imported petrol despite the local production capabilities of the newly inaugurated Dangote Petroleum Refinery in Lekki, Lagos. During a meeting with President Bola Tinubu, Dangote emphasized, “I have a refinery; I'm not in the retail business. Retailers should come forward and pick petrol from my facility. If they don't, what do you want me to do?” 

Dangote's refinery has the capacity to produce 650,000 barrels per day, making it Africa's largest oil refinery and the biggest single-train refinery globally. Despite this, the Nigerian National Petroleum Company Limited (NNPCL) continues to import petrol, which Dangote claims is 15% more expensive than his domestically produced fuel. He urges the NNPCL and oil marketers to stop imports and utilize locally produced petrol.

Dangote's frustration stems from the fact that his refinery sells petrol to NNPCL at a lower price than the imported fuel. He believes that retailers should take advantage of this and purchase petrol directly from his facility. By doing so, Nigeria can reduce its reliance on imports and benefit from the cheaper, high-quality petrol produced domestically.

Dangote's entry into the market is expected to bring relief to Nigeria's energy challenges, which have led to fuel queues and tripled prices since the subsidy removal in May 2023. With the refinery's capacity to produce diesel, aviation fuel, and now petrol, Dangote's contribution to Nigeria's energy sector is significant.

Nigeria's fuel prices have surged again, with Premium Motor Spirit (PMS) prices rising by N30 in Abuja (to N1,060/litre) and N27 in Lagos (to N1,025/litre). This adjustment reflects the government's deregulation policy, which allows prices to fluctuate based on supply and demand.

The latest hike follows a pattern of consistent increases since September, with prices skyrocketing from N617 to N897 and then to N1,030 within two months. Since the fuel subsidy removal in May 2023, the Nigerian National Petroleum Company Limited (NNPCL) has steadily raised petrol prices.

However, analysts are questioning the rationale behind the latest price increase, particularly given the 8% drop in international crude oil prices, from $78 to $72 per barrel. This decline should theoretically lead to lower production costs and, subsequently, lower pump prices.

Experts argue that the NNPCL's price adjustment contradicts market dynamics, sparking concerns about the deregulation policy's effectiveness and transparency. As Nigerians grapple with soaring fuel costs, stakeholders urge the government to reassess its approach and ensure fair pricing that reflects global market trends.

The Petroleum Retail Outlets Owners Association of Nigeria is sounding the alarm on the dire situation with petrol prices, urging the government to step in with a proposed N100 billion package to stabilize costs. President Billy Gillis-Harry is leading the charge, emphasizing the need for intervention amidst the recent price hikes.

According to Joseph Obele, the National Publicity Secretary, association members were already purchasing petrol from NNPCL at rates of N1,020 to N1,040 before the latest increases. What's more, the price hasn't been officially updated on the purchasing portal, but there are hints that further adjustments may be on the horizon.

These price hikes have ignited widespread concern and criticism, particularly regarding their potential impact on inflation and economic hardship in Nigeria. Experts warn that the increases will significantly affect sectors like transportation and food, driving inflation up. Nigeria's inflation rate has already seen 18 consecutive months of growth, with year-on-year headline inflation at 33.4% in July 2024.

The Economic Impact:

Inflation Concerns: The hike in petrol prices will significantly impact inflation, particularly in sectors like transportation and food.

Economic Hardship: The increases will drive up costs of living, affecting small businesses and households reliant on petrol.

Nigeria's Economic Outlook: The country's economic outlook remains uncertain, with macroeconomic indicators worsening following the subsidy removal.