Nigerians have been warned that the price of petrol at the pump will rise again.
This is due to the increase in the price of crude oil, as well as the naira’s depreciation against the US currency.
Oil marketers indicated that the cost of crude oil and the dollar exchange rate accounted for more than 80% of the cost of PMS.
Brent crude, the global oil standard, hit $94 per barrel on Sunday, the highest level since 2023.
Oil began the year at around $82/barrel, dropped below $70/barrel in June, and has recently traded around $92/barrel.
Despite the Federal Government and the Nigerian National Petroleum Company Limited insisting that petrol subsidies had ended following the deregulation of the downstream oil sector, operators asserted on Sunday that the government was still administering quasi-subsidies.
They said that with the recent spike in crude oil prices, the cost of petrol was expected to climb, emphasizing that if the government insists on keeping the product at N617/litre, the subsidy on PMS would be quietly refunded.
Chief Chinedu Ukadike, National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, said in a statement on Sunday,
“The Group Chief Executive Officer of NNPC, in one of his statements, had pointed out that as long as the dollar continues to rise, Nigerians should not expect petroleum products prices to be pegged.
“The cost of crude oil is also on the rise and it impacts on petrol price, because PMS is derived from crude.
“So in this price deregulation regime, once the dollar increases, automatically it means that the cost of importing petroleum products will also increase. And the cost of every other related service will rise.
“So the fuel we are buying today at N617 or N596 depending on where you buy it and based on the nearness to depots, is actually below what the price should really be, going by the rise in dollar and crude oil price.
“I said earlier that what we are experiencing now is quasi-deregulation. The rise in crude oil price has both positive and negative effects on Nigeria. It is positive because it increases our generation of dollars when we sell the crude.
“But it is negative in the sense that we still use that dollar that we have got to import the finished products of crude. That is the problem. For if Nigeria is refining products, then there will be a windfall, but since we import with the dollar that we make, then it makes no sense.
“The gap is becoming too much. Also, the exchange rate gap between the official and parallel markets is widening. And these gaps have to be filled by the government through quasi-subsidy on petrol.
“You also know that most of the investors who tried to import products when it was announced that the subsidy on petrol had been removed, are now finding it very difficult to do so.
“This is because after buying the dollar in the parallel market, they cannot recoup what they have invested. So the government must be transparent with this subsidy removal thing. It should apply it to the fullest, so that competition can set it.”