Petrol Price Hike: FG's Subsidy U-Turn

Dangote's Recommendation Yields Fuel Price Increase

“NNPCL which is the lead in this business is showing that this is the way to go...”

Nigeria's fuel price hikes to N1,030-N1,200/liter, despite Naira-for-crude sales to Dangote Refinery, sparking outrage from labour unions and trade organizations.

The price of petrol skyrocketed to between N1,030 and N1,200 per liter on October 9, following a joint decision by the Nigerian National Petroleum Company Limited (NNPCL) and Dangote Refinery. This marks the second price hike since Dangote Refinery started distributing petrol on September 15, 2024.

NNPCL's retail outlets witnessed significant price increases, with Lagos and Abuja recording jumps from N855 and N897 to N998 and N1,030 per liter, respectively. Enugu saw even steeper hikes, with prices ranging between N1,200 and N1,300 per liter.

The latest price surge follows Dangote Refinery's entry into the market, with NNPCL as its sole buyer. The partnership has led to two price increases in less than a month, sparking concerns over the impact on consumers and the economy.

Dangote Refinery's market entry sparked full deregulation, causing petrol prices to surge. Prices jumped from N557/N617 to N998/N1,030 per liter at NNPCL stations over two months.

Despite the Federal Government's October 1 initiation of Naira-for-crude sales to Dangote Refinery, fuel prices continue to rise, dashing Nigerians' hopes for cheaper fuel amid economic struggles.

The price hikes follow Aliko Dangote's recommendation to remove fuel subsidies, influencing the sharp increase in pump prices under President Bola Tinubu's administration. Since Tinubu's inauguration on May 29, 2023, petrol prices have skyrocketed from N195 per liter to N1,030 per liter by October 9, 2024.

PETROAN President Billy Gillis-Harry noted that the price increase suggests the government has implemented Dangote's advice to fully deregulate the fuel market by eliminating subsidies.

“If indeed we listen to Aliko Dangote's request in his Bloomberg interview on the fact that the president should remove subsidy completely and deregulate the downstream sector, maybe this is one step to ensuring that the Petroleum Industry Act is implemented.

“NNPCL which is the lead in this business is showing that this is the way to go.

“But even at that, if they are selling at N1050 per litre in Port Harcourt, what will now be the landing price to retailers?

“I think the decision is not a bad one because the sector is volatile and prices are fluctuating. Today, it may go higher and tomorrow it may come down,” he said.

Chinedu Ukadike, Independent Petroleum Marketers Association (IPMAN) spokesperson, linked the recent fuel price surge to the deregulation of the petroleum sector.

Several prominent organizations in Nigeria have strongly condemned the recent fuel price hike and demanded an immediate reversal. 

Condemning the Price Hike

• The Nigerian Labour Congress (NLC) expressed deep concern that this increase will worsen poverty in Nigeria, with President Joe Ajaero accusing the Federal Government of betraying the labor movement>
• The Centre for the Promotion of Private Enterprise (CPPE) echoed these sentiments, stating that Nigeria is not prepared for complete deregulation of petrol prices, according to Director Muda Yusuf.
• The Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) also weighed in, with National President Dele Oye emphasizing that the hike will further burden Nigerians and exacerbate their economic struggles.

These organizations are not alone in their opposition. The House of Representatives members have also denounced the price increase and called for its immediate reversal. Similarly, the Trade Union Congress (TUC) and other groups have joined the chorus of disapproval. The Forum of South-East Academic Doctors (FOSAD) expressed profound distress over the price hike, citing its devastating impact on millions of Nigerians.

Nigeria's fuel price hike exacerbates the country's existing economic woes, characterized by soaring prices for essential goods and services. The latest inflation figures – 32.15% headline inflation and 37.52% food inflation in August – underscore the vulnerability of the economy.