Brent, the international benchmark for crude oil, hit a high of $84 a barrel on Wednesday, fueling concern that Nigeria’s pump price of Premium Motor Spirit, also known as petrol, will rise again in the coming weeks.
According to The Punch, crude oil prices, which are a key factor in determining the cost of refined petroleum products, have been fluctuating between $75 and $78 a barrel for more than a month, but they reached a record high on Wednesday after reaching previous highs the previous week.
The Nigerian National Petroleum Company Limited has maintained its position on selling PMS at the market price, despite oil marketers saying on Wednesday that the spike in crude oil prices combined with the rise in currency rates would merit a further increase in petrol prices.
Despite the fact that other oil marketers have started importing petrol into Nigeria, NNPCL remains the country’s main source of this commodity.
According to the Major Oil Marketers Association of Nigeria, over 80% of the cost build-up for PMS was accounted for by the worldwide price of crude oil and the exchange rate.
Since the market has been liberalized, the price of crude oil has increased, and the value of the dollar has increased. This is what a deregulated market produces, according to the secretary of the Independent Petroleum Marketers Association of Nigeria in Abuja-Suleja, Mohammed Shuaibu.
After President Bola Tinubu declared an end to fuel subsidies on May 29, 2023, Nigeria’s downstream oil industry was completely deregulated.
Due to this, the price of petrol increased from N198 per liter in May to over N500 per liter in June before rising to over N600 per liter in July.
However, marketers expect a further increase in the price of fuel at the pump due to the most recent spike in the price of crude oil and currency fluctuations.
The NNPCL’s Chief Corporate Communications Officer, Garba-Deen Mohammad, argued that because PMS had been subsidized, the oil company would continue to sell petrol at the going market rate, noting that the Federal Government had previously been responsible for subsidy costs.
He declared, “The cost of subsidizing is no longer on the Federal Government. Due to NNPC’s requirement to import PMS and sell it at a subsidized price, the Federal Government was paying the burden while the company was experiencing under-recovery.
“As a result, NNPC cannot claim that we won’t import PMS because we won’t sell it for the right rate. This is due to the fact that one of the NNPC’s primary responsibilities is to guarantee energy security. Therefore, NNPC must import and sell at a price that is approved by the government.”
