In a move that has raised eyebrows across the country, the Nigerian National Petroleum Company Limited (NNPCL) has kept the price of Premium Motor Spirit (PMS), commonly known as petrol, unchanged at N880 per litre in the Federal Capital Territory (FCT), despite the recent upward adjustments in fuel prices by other major marketers. This decision by NNPCL has prompted questions about its reasons for maintaining the price, especially as the cost of crude oil and the exchange rate continue to rise, factors that typically influence petrol pricing.
According to information from NNPCL retail outlets in Abuja, the price of petrol has remained constant at N880 per litre, a price that has stayed the same even as other fuel marketers across the country have increased their prices. In Lagos, for example, while NNPCL has kept the price at N860 per litre, many independent and major marketers have raised their prices to between N930 and N980 per litre.
This stability in the state-run oil company’s pricing stands in stark contrast to the sharp increases seen in the wider fuel market, which have left many Nigerians grappling with the rising cost of living. With the price hike by private marketers, petrol stations in Abuja have been selling petrol between N950 and N970 per litre, and some independent marketers have pushed the price as high as N990 per litre, which has led to a noticeable decline in patronage at their stations. However, NNPCL stations are still reporting significant customer turnout, a testament to the impact of its stable pricing.
NNPCL’s Chief Corporate Communications Officer, Mr. Olufemi Soneye, explained that the decision to maintain the price was in line with the company’s core mandate of ensuring energy security for Nigeria. Under the Petroleum Industry Act (PIA), NNPCL is designated as the “supplier of last resort,” meaning it is obligated to provide fuel to the market, especially during periods when supply might be disrupted by other market players.
“The law mandates NNPCL to be the supplier of last resort,” Soneye told *The Nation* in a WhatsApp text message. “We are adhering to our mandate to ensure that Nigerians have access to affordable fuel, even in the face of rising costs in the international market.”
Soneye also clarified that despite the rising costs of key components in the petrol pricing template, such as the price of crude oil and fluctuations in the exchange rate, NNPCL was not maintaining the N880 price at a loss. He noted that the corporation’s refineries, particularly the Port Harcourt and Warri refineries, have been operational, allowing NNPCL to supply refined products to the domestic market. The company sources its feedstock from its upstream arm, the National Petroleum Development Company (NPDC), as well as joint venture companies (JVCs), allowing it to maintain a relatively stable cost base compared to private marketers who depend on international crude oil markets for their supply.
The sustained N880 per litre price, despite changes in the market environment, suggests that NNPCL is operating with a slim profit margin. However, the company appears to be prioritizing its role in maintaining energy security over immediate financial gains. This is a clear message to both the public and the government that NNPCL is committed to fulfilling its mandate of energy provision without exacerbating the economic difficulties faced by ordinary Nigerians.
While NNPCL’s stations continue to attract significant patronage, the same cannot be said for many other marketers, especially those who have increased their prices to align with the current market conditions. A visit to some major petrol stations in Abuja revealed a noticeable difference in fuel prices. While NNPCL stations maintained their prices, private marketers were selling fuel at much higher rates. Some stations were charging between N950 and N970 per litre, and independent marketers were even selling petrol for as much as N990 per litre, resulting in a sharp drop in sales as many customers opted to buy from the state-run outlets.
The price disparity between NNPCL and other marketers highlights the challenges faced by consumers, many of whom are unable to afford the increasing cost of fuel. Despite the higher prices at other stations, some marketers, such as MRS, a Dangote affiliate, have adjusted their prices to N950 per litre, a significant increase from the previous N880 price. This price hike followed an announcement by the management of Dangote Refinery on March 19, 2023, that they would temporarily suspend the sale of petrol in Naira due to NNPCL halting the sale of feedstock to the refinery in Naira.
In the wake of these developments, many Nigerians have raised concerns about the impact of these price hikes on their daily lives. As fuel is a critical component in the functioning of the economy, with widespread effects on transportation costs, food prices, and the overall cost of living, the rising price of petrol has further strained the average Nigerian household. For many, the burden of paying more for fuel comes at a time when the cost of essential goods and services is already on the rise.
The NNPCL’s ability to maintain the price of petrol at N880 per litre is largely attributed to its operational refineries, which continue to supply refined products to the local market. The company has been able to reduce its reliance on imported refined products by utilizing its Port Harcourt and Warri refineries, both of which are producing refined products to meet domestic demand.
Despite challenges in the downstream sector, NNPCL has worked to keep fuel prices relatively stable. The company’s ability to refine its own crude oil gives it a competitive advantage over private marketers who have to rely on imported refined products, which are subject to international market fluctuations. NNPCL’s focus on refining its own feedstock from its upstream operations helps it maintain some level of control over its costs, allowing it to offer a more consistent price to consumers.
This operational strategy has been a key factor in NNPCL’s ability to offer fuel at a more affordable rate, despite the rising costs of crude oil and exchange rate fluctuations. The company’s commitment to providing affordable fuel to Nigerians, particularly at a time when other marketers have raised their prices, demonstrates NNPCL’s dedication to fulfilling its mandate as the supplier of last resort.
