Despite claims of subsidy removal, the landing cost of petrol in Nigeria has risen sharply over the past year. In May 2024, the cost to import petrol reached N1,026.71 per litre, a 46.8% increase compared to May 2023. This increase is attributed to a combination of factors, including rising global crude oil prices and a weaker Nigerian currency.
Oil marketers are struggling under these conditions. The total cost of importing petrol, including landing cost, financing, and other expenses, now exceeds the government-controlled pump price. This makes it unprofitable for most marketers to import petrol, leaving the state-owned Nigerian National Petroleum Company Limited (NNPCL) as the primary importer.
The high cost of petrol contributes to rising transportation costs and overall inflation in Nigeria. The National Bureau of Statistics reported a 176% year-on-year increase in the average retail price of petrol in April 2024. This situation highlights the ongoing debate about petrol subsidies in Nigeria. While the government claims to have scrapped subsidies, the high landing cost suggests otherwise. Marketers are calling for a free-floating pump price to reflect market realities.
Source: Vanguard