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Posted By MrCover On August 25th, 2023

As the value of the Naira against the dollar continues to plunge further, Oil marketers have insisted on a possible hike in the pump price of petrol. 

Oil dealers and marketers on Thursday, August 24, told Punch that with the exchange rate at N920/$, the pump price of petrol could not remain at N617/litre, particularly if the current exchange rate lingered. The oil marketers, however, pointed out that since the Federal Government had insisted that it would not increase the petrol price, it must then be “subsidising the commodity secretly, based on the prevalent exchange rate reality.”

It was gathered that the ex-depot price of petrol was around N585/litre on Thursday. The projected cost of N680/litre, going by the current forex rate, means that the government might be forced to spend about N95/litre as subsidy.

Last week, the Nigerian Midstream and Downstream Petroleum Regulatory Authority stated that petrol consumption in Nigeria was about 52 million litres daily. When this is multiplied by the estimated N95/litre projected subsidy and calculated for a month, it implies that the government could be forced to spend about N153bn as fuel subsidy monthly.

Speaking on this development, the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chinedu Ukadike, said.

‘’I still maintain that since we are still importing petroleum products into this country, it has to do with forex. And once it has to do with forex, it means that so much naira will be chasing a few dollars. And since we don’t have the influx of dollars into Nigeria, the after effect is that the landing cost of petrol will continue to increase as long as the dollar continues to rise.

The rise in dollar automatically leads to an increase in the cost of petroleum products, except the NNPCL is subsidising it through the Federal Government. I also recall the last statement by the Special Adviser to the President on Media, who said he got a brief from the president that the fuel price would not rise.

That automatically means that there is quasi-deregulation and that Mr President is cushioning the price of petroleum products in relation to the dollar. So if the dollar is higher at the parallel market, it means that whatever is the offshoot, the Federal Government will continue to keep petrol prices within a price regime.

“And that regime currently is from N590/litre to N620/litre depending on the part of Nigeria you are buying it from. But if you allow the commodity to sell at the free market price, with respect to the hike in dollar currently, the cost of petrol should be around N680/litre and N700/litre.”

The Special Adviser to the President on Media and Publicity, Ajuri Ngelale, had told State House correspondents last week, that President Bola Tinubu had instructed that the cost of petrol should not increase.

“Mr President wishes to assure Nigerians following the announcement by the NNPC Limited just yesterday (Monday) that there will be no increase in the pump price of PMS anywhere in the country. We repeat, the President affirms that there will be no increase in the pump price of PMS,” he said

NNPCL had also refuted rumours that it was planning to increase the pump price of petrol.