Nigerian State Oil Company Rows Back Regulator’s Fuel-Price Hike

Regulator had announced an almost 30% price increase Thursday. Oil minister says government, unions still discussing pricing.

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Nigeria’s state oil company ruled out higher gasoline prices this month, less than a day after the fuel regulator signaled the first increase since November.

The reversal means that government-owned Nigerian National Petroleum Corp., the nation’s sole importer of gasoline, will continue to bear the cost of subsidizing fuel in Africa’s biggest economy. It’s the second time in as many weeks that policy makers have sent out contradictory signals, after the central bank on March 4 set aside plans announced by one of its officials to bar foreigners from some debt auctions.

The Petroleum Products Pricing Regulatory Agency published an announcement late Thursday saying gasoline should retail for 209.6-212.6 naira ($0.51) a liter, almost 30% higher than current rates. On Friday, the NNPC insisted there would be no increase in March, reiterating a statement published at the start of the month.

Based on the PPPRA data, the NNPC is making a loss of at least 47 naira a liter on the current retail price of 165 naira.

“Distress and Inconvenience”

Nigeria’s government has been trying since March 2020 to remove energy subsidies that cost about 744 billion naira ($1.8 billion) a year over the past 15 years, according to the Information Ministry. After prices were allowed to rise several times in the second half of 2020, they have remained steady since early December in the face of threatened labor-union protests, even though oil is trading about 40% higher at $69 per barrel.

Minister of State for Petroleum Resources Timipre Sylva apologized for “any distress and inconvenience” caused by the PPPRA’s publication. The government wouldn’t “unilaterally abandon” ongoing discussions with the unions on a “reasonable price regime,” he said in a statement Friday.

The NNPC fixes the price at which it sells the product to depot owners, while the PPPRA sets the margins that wholesalers and filling stations can make. The announcement setting out the higher prices was removed from the PPPRA’s website Friday morning and replaced with a message saying the published prices were “only indicative of current market trends.”

Companies including Total SE and Ardova Plc, which buy gasoline from the NNPC to sell to retailers and consumers, are calling for an end to subsidized fuel and full deregulation of the pump price.

– Bloomberg

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