The cost of importing Premium Motor Spirit (PMS), also known as petrol, has increased sharply, with the landing cost per litre rising to N885 on Wednesday, up from N797 just one week ago. This significant rise, reported by the Major Energy Marketers Association of Nigeria (MEMAN), has sparked concerns that the price of petrol at filling stations across the country could soon reach as high as N1,000 per litre, up from the current range of N940 to N970.
The sharp increase in the landing cost of petrol represents an 88% rise compared to last week’s N797 per litre, and it reflects growing challenges in Nigeria’s downstream oil sector. The new price for landing petrol could trigger a hike in retail prices at filling stations, with Nigerians already bracing for the impact of rising fuel costs.
The current increase in landing cost may have far-reaching effects on petrol prices in Nigerian filling stations. According to the latest data, the new landing cost of N885 per litre comes as a direct consequence of the higher cost of importing fuel. Consequently, it is expected that retail prices could soon rise to approximately N1,000 per litre. Presently, petrol prices at various stations across the country hover between N940 and N970 per litre, but with this increase in landing costs, consumers may see prices climb significantly in the coming days.
The adjustment in the landing cost is seen as a direct result of the challenges facing the country’s import-dependent fuel supply chain. The fact that the landing cost of imported petrol now stands at N885 is indicative of the rising costs associated with sourcing fuel from international markets. Additionally, the ex-depot price of petrol from Dangote Refinery is pegged at N815 per litre, but the company’s retail prices in Lagos and Abuja remain at N860 to N880 per litre.
Further complicating the situation is the decision by Dangote Refinery to halt sales of petroleum products in Naira, a move that could significantly affect the pricing structure in the Nigerian market. Dangote Refinery’s decision, which was announced last week Wednesday, has raised concerns that the refinery’s new pricing template, based on foreign currency transactions, could result in higher prices for petrol and other petroleum products in the country.
The move by Dangote Refinery to stop selling in Naira, at a time when fuel prices are already increasing, has compounded the uncertainty in Nigeria’s fuel market. The decision is widely seen as a response to the depreciation of the Naira and the challenges it poses in the importation of fuel. Experts believe that the move could lead to price hikes, further putting pressure on Nigerian consumers who are already struggling with the high cost of living.
As the price of petrol continues to rise, the Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) has warned Nigerians against panic buying. In a statement issued on Tuesday, the association expressed concern over the growing uncertainty surrounding petrol prices and the potential for fuel scarcity. PETROAN cautioned that while price fluctuations were to be expected, there was no need for Nigerians to rush to filling stations and cause unnecessary disruptions to fuel supply.
The association also called on the Nigerian government to continue its Naira-for-Crude deal with Dangote Refinery, which has been a key arrangement for stabilizing fuel prices and ensuring a steady supply of petrol. PETROAN emphasized that such deals are vital in maintaining affordable pricing in the local market, especially amidst the fluctuating costs of crude oil on the international market.
In addition to urging the government to maintain the Naira-for-Crude arrangement, PETROAN also emphasized the need for fair competition in the downstream sector. The association called on relevant stakeholders to ensure that the pricing mechanisms for both imported petrol and local products remain transparent and competitive, allowing consumers to benefit from fair and reasonable pricing.
In its statement, PETROAN also strongly opposed the sale of petroleum products in foreign currencies such as dollars within the Nigerian market. The association raised concerns that such a practice would exacerbate the challenges faced by ordinary Nigerians, who already face high fuel prices due to the depreciating value of the Naira. According to PETROAN, allowing fuel to be sold in foreign currencies would make petrol even more expensive for Nigerians, especially those who are unable to access foreign exchange easily.
The issue of dollar-denominated fuel sales has been a growing concern in Nigeria, particularly in the wake of the economic challenges that have led to the devaluation of the Naira. While some companies in the oil sector, including Dangote Refinery, have moved to dollar-based transactions, PETROAN has voiced its opposition, arguing that such a practice could further inflate the cost of living and create additional barriers for Nigerian consumers.
Nigeria, which is Africa’s largest oil producer, has long struggled with issues related to fuel supply and pricing. Despite being rich in crude oil, the country relies heavily on the importation of refined petroleum products to meet its domestic demand. This dependency on imported fuel, coupled with the volatility of the global oil market, has led to frequent fuel price fluctuations that directly affect Nigerian consumers.
The downstream sector in Nigeria, which involves the refining, distribution, and marketing of petroleum products, has been marked by inefficiencies and challenges. While the government has sought to address some of these issues by investing in local refineries, the country still imports a significant portion of its fuel needs. This reliance on imported fuel has left Nigeria vulnerable to global oil price changes, currency fluctuations, and other economic pressures.
The recent increases in the landing cost of petrol highlight the vulnerability of the Nigerian fuel market to international market dynamics. As the Naira continues to lose value against major currencies like the dollar, the cost of importing fuel becomes more expensive, leading to higher prices for Nigerian consumers.
The government has made efforts in recent years to stabilize the fuel market, including attempts to revamp the country’s refineries and reduce its reliance on imports. However, these efforts have been slow, and many Nigerians continue to face high fuel prices, with little relief in sight. The increase in the landing cost of petrol is a clear indication that the situation may worsen before it gets better.
