Petroleum marketers have told Nigerians to expect further hikes in the pump price of petrol.
The oil marketers explained that this is due to the rise in the cost of crude oil, coupled with the depreciation of the naira against the US dollar, both of which account for over 80 percent of the cost of PMS.
Brent crude, the global benchmark for oil, rose to $94/barrel on Sunday, September 17, the highest figure in 2023.
Oil had started the year at about $82/barrel, dipped to $70/barrel in June, but traded above $92/barrel in the past week.
Although the Federal Government and the NNPC had insisted that the subsidy on petrol had ended, oil marketers said on Sunday that the government was implementing a quasi-subsidy.
They explained that with the latest rise in crude oil price, the cost of petrol was meant to increase, stressing that if the government insists on leaving the commodity at N617/liter, then subsidy on PMS had been returned quietly.
The National Public Relations Officer, of the Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, in a statement on Sunday, said, “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 the dollar and crude oil price.
“I said earlier that what we are experiencing now is quasi-deregulation. The rise in crude oil prices 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. 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.”