Nigerians to suffer more hardship as petrol price climbs toward N1,500/litre

Nigerians may suffer more hardship as the premium motor spirit (PMS), also known as petrol, is expected to sell at N1,500 per litre, owing to the cash crunch that has hit the Nigerian National Petroleum Company (NNPC) Limited.

Industry operators revealed that the Federal Government may no longer sustain the cost of under-recovery, otherwise known as subsidy as a result of the steady rise in petrol import bills, adding that pump price may be officially raised soon to enable the government, through the Nigerian National Petroleum Company Limited, NNPCL, to generate enough funds to settle its outstanding bills on products received on credit supply by several international dealers.

They speculated that a compromise pump price of N1,000 per litre or more may be underway, though some of them quoted the landing cost of the product at about N1,200 per litre, excluding the cost of delivery to petrol stations.

They said that landing cost of petrol, which includes the product’s international price, shipping, insurance and other charges, has increased to N1,203/litre from N720/litre in October 2023. Should the NNPC cease to pay petrol subsidies, which is likely to happen, the PMS price will settle between N1, 300 and N1,500 per litre.

The NNPC, which is the sole importer of petrol into Nigeria, has consistently denied subsidising the cost of PMS but refused to disclose the landing cost of the product.

However, it admitted on Sunday that it is facing a financial strain due to the supply costs of the PMS.

An independent oil marketer, who preferred anonymity, said: “It was almost inevitable for the pump price to remain the same, as this is one of the outcomes of a fully deregulated market.

“The NNPCL remains the main importer, with private importation remaining limited. This situation is worsened by Nigeria’s declining crude oil output, which impacts the country’s capacity to import refined products,” the marketer said.

Tunji Oyebanji, the chief executive officer of 11 Plc (formerly Mobil Nigeria), said selling below the landing cost, whether from import or local refineries, is not sustainable.

“If they sell at an economic price, perhaps others can import, supply will improve, and the financial strain will not be on them alone. It’s either that or these supply disruptions will continue indefinitely. I am baffled that they have not been upfront about this since instead of denials,” Oyebanji said in a note.

Further findings showed the landing cost of N1,203 does not include Nigerian Ports Authority charges, vessel charges, the Nigerian Maritime Administration and Safety Agency charges, and other distribution costs.

The Managing Director of a leading transport company with several offices across the country who wouldn’t like his name on print told Vanguard that fuel scarcity has been one of the major problems of transporters in the country.

He wondered: “Has there been any time that fuel is available in the country? We have resolved that whatever price we buy, we shall review the fares to break even. We won’t be working without making a profit”.

He lamented that the local governments, too, are not helping matters with all manners of levies on Transport Company.

He said: “In Enugu, Abia, Rivers, Cross River, and many others collect not less N5,000 each from every boss daily which they tag daily ticket. Also, security agencies extort drivers on the highways, making the business very difficult for transporters.

He also noted that drivers are forced to cough out huge amounts for failure to provide the already suspended proof of ownership receipt by the government.

All these, he said have contributed to the fare hike across the country. A journey from Lagos to the Eastern part of the country costs as much as N30,000 as against N15,000 a few years ago.