Petrol price to settle between N478 and N600/ltr as subsidy goes

At the current petrol pricing template, the pump price of petroleum products will sell anywhere between N478 per litre to N590 per litre based on the effective dollar rate the Central Bank settles upon following the directive by the new president to reform currency rates, BusinessDay analysis shows.

NNPC Limited is currently meeting with marketers to agree on indicative pricing but in the meantime, government agencies and marketers have called upon Nigerians not to panic.

Using the Central Bank dollar to naira rate of N467/$1, the pump price of petrol could rise to N390 per litre. When the rate allowed for airlines to repatriate funds which stand at N600/$1, BusinessDay’s calculations show that the effective pump price would be N478 per litre in Lagos.

At the black market rate of N750, the picture changes. The product cost rises to N503.91 per litre. Other costs including trader’s margin, freight, NPA port charges, NIMASA, financing costs, jetty storage, and wholesale margin bring the landing cost to N565.34.

When retailers’ margins, dealer’s margins and transport costs are added, it brings the price in Lagos to N590.34. The price could average around N600 when it is transported across Nigeria.

The major components that constitute petrol landing cost in Nigeria include product cost, traders and insurance margin, shipping, charges by government agencies, financing and banking charges and storage charges. These come to about N358.24 per litre as landing charges.

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Another N25 is added based on retailer margins (N15), dealers margins (N5) and Transport cost at (N5). This brings the total costs to N383.24. However, the pump price would vary based on station and location and with the government’s subsidised transport charges could average at N385 per litre using the official exchange rate.

BusinessDay reached this conclusion by analysing the Nigerian government’s current pricing template based on current oil prices and marketers’ surveys on what prices would be at different oil price and dollar rate scenarios.

The current panic buying is contributing to worsening the problem as it gives unscrupulous marketers the avenue to exploit consumers. This is why the NNPC Ltd, the marketers group and the regulator are calling for calm.

The oil regulator said in a statement that it is working with the Nigerian National Petroleum Company Limited and other key stakeholders to guarantee a smooth transition, avoid supply disruptions, and ensure that consumers are not short-changed in any form.

“Contrary to speculations and concerns, the announcement is in line with the Petroleum Industry Act (2021) which provides for total deregulation of the petroleum downstream sector to drive investment and growth,” the statement said.

The Authority assures that there is an ample supply of petrol to meet demand as it has taken necessary steps to ensure distribution channels remain uninterrupted and fuel is readily available at all filling stations across the country.