Marketers React to $94 Oil, Plans Fresh Fuel Price Hike

The price of crude oil has been on the rise, pushing up the cost of gasoline as Nigerian Naira continues depreciating against the US Dollar. This is coupled with the fact that the Federal Government is spending more money on petrol subsidization than has previously been reported.

On Sunday, dealers from the downstream oil sector said that the cost of crude oil and the exchange rate of the dollar accounted for over 80 per cent of the cost of Premium Motor Spirit (PMS), popularly known as petrol.

Brent crude, the global benchmark for oil, rose to $94/barrel on Sunday, the highest figure in 2023, with Petrol already sold at N617/litre in July. Oil had started the year at about $82/barrel, dipped to $70/barrel in June, but traded above $92/barrel in the past week.

The Nigerian Association of Road Transport Owners (NARTO) has corroborated the concerns of marketers, stating that the price cap on petrol has made it tough for marketers to comply with the demands of NARTO with respect to increasing the cost of transportation for petrol.

The Group Chief Executive Officer of Nigerian National Petroleum Company Limited (NNPCL), has however, stated that as long as the dollar continues to rise, Nigerians should not expect petroleum products prices to be pegged.

The National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, said that the rise in crude oil price has both positive and negative effects on Nigeria. He said that the positive effect comes from increased generation of dollars when Nigeria sells the crude, but the negative effect is that Nigeria still uses the gotten dollars to import the finished products of crude.

On whether the rise in oil prices would warrant further hike in the cost of PMS and other finished products, therefore increasing subsidy on petrol particularly, Chief Ukadike stated that the gap is becoming too much.

The President, Petroleum Products Retail Outlets Owners Association of Nigeria (PPROA), Billy Gillis-Harry, said that though the cost of crude had been rising lately, the NNPCL should be able to manage it for the benefit of Nigerians, with respect to petroleum products prices.

He said that crude oil is sold at a higher price which should positively impact the price of petroleum products as passed on to Nigerians, since the major importer of petroleum products is the NNPC and they do that on a swap basis, unless they are telling us that the swap is not efficient.