Petrol price set for another increase as landing cost goes up

There are strong indications that the pump price of petrol may be on the verge of another increase—the third increase in 10 weeks—as information gathered from oil marketers suggests that the increase may be much sooner than later.

This prediction is backed up by new information about the surge in the landing cost of petrol. Which has gone up by 37.4 percent month-on-month to N632.17 per litre in July 2023, up from N460 per litre in June 2023. This cost doesn’t even include other additional expenses like transportation and taxes, which could push the final price to nearly N700 per litre.

Some marketers who spoke to Financial Vanguard are predicting that the landing cost for August will rise further due to worsening factors, including foreign exchange scarcity and deteriorating exchange rates. The value of the naira has fallen about 6.5 percent in the official market and 25 percent in the parallel market since the last pump price increase.

Due to these challenges, it’s becoming unprofitable for many to import at the current pump price.

Commenting on the oil price situation to Financial Vanguard, Mike Osatuyi, the National Operations Controller, Independent Petroleum Marketers Association of Nigeria, IPMAN, said: “It is good because the high crude oil prices mean additional revenue to the federal government. The revenue would likely be used to fund projects and programmes because the government is no more involved in the payment of fuel subsidy.”

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He, however, added that it was almost inevitable for the pump price to not rise, as this is one of the outcomes of a fully deregulated market. He expressed optimism that it will come down in the future as a result of competition.

The Nigerian National Petroleum Company Limited (NNPCL) remains the main importer, with private importation remaining limited.

This situation is worsened by Nigeria’s declining crude oil output, which impacts the country’s capacity to import refined products. The Organization of Petroleum Exporting Countries (OPEC) has noted the dwindling output of many nations, including Nigeria.

Other experts who offered their insights into the situation said that the high crude oil prices could contribute additional revenue to the government, albeit at the expense of consumers who may have to pay more for fuel.

The overall market remains uncertain, with rising crude oil prices and Naira depreciation potentially continuing to impact prices and causing challenges for deregulation efforts.