Fuel prices in Nigeria, particularly at independent filling stations, have surpassed the officially approved price bands set by the Federal Government. Premium Motor Spirit (PMS), commonly known as petrol, is being sold at exorbitant rates, with some stations in the Northern region charging as high as N685 per liter. This surge follows a previous increase in July, when the pump price was raised from a range of N537 to N550 per litre to N617 per liter in certain regions.
Key Points:
- Price Hike Details:
- Petrol prices have surged beyond official bands, with rates as high as N685 per liter observed in the Northern region. In Abuja, independent dealers raised prices to N630 per liter, while black market sellers offered fuel for around N850 per liter.
- Role of the Nigerian National Petroleum Company Limited (NNPCL):
- NNPCL, the primary importer of petrol in Nigeria, plays a pivotal role in determining official fuel prices. When NNPCL stations adjust their prices, other marketers in the industry follow suit.
- End of Petrol Subsidies and Price Surge:
- President Bola Tinubu’s announcement on May 29 that petrol subsidies had ended led to a significant surge in petrol prices, escalating from N198 per liter to over N500 per liter on May 30, 2023.
- Challenges in Fuel Importation:
- NNPCL has become the sole importer of petrol in Nigeria as other marketers face difficulties in accessing the required United States dollars for fuel imports.
- Factors Driving Price Surge:
- The high cost of diesel, essential for transportation, is a significant factor contributing to the increased petrol prices at independent retail outlets. The expense of transporting PMS from South to Northern Nigeria, which exceeds N2 million, is also a concern. Diesel prices exceeding N1,000 per liter have become a critical component in fuel distribution.
- Comparative Pricing:
- Prices at NNPCL retail stations and major marketers are comparatively lower due to their access to tank farms and depots for sourcing products.
- Regulatory Clarification:
- The downstream oil sector regulator, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), has not provided a comprehensive explanation for this price surge.
Conclusion: The surge in fuel prices beyond official bands poses significant challenges for consumers and the broader economy in Nigeria. Factors such as the end of petrol subsidies, difficulties in fuel importation, and rising costs of essential components like diesel contribute to this situation. A clear regulatory response and long-term strategies are needed to address the complexities of the fuel pricing system in the country.
