Real reason for current fuel price hike, by stakeholders

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Oil industry stakeholders have said the total deregulation of the oil sector is the reason of the increase in Premium Motor Spirit (petrol) by the Federal Government.

The oil marketers indicated that hitherto the government was still paying small subsidy on petrol, but has now fully removed the subsidy on the commodity inducing the current increase in fuel prices across the country.

Indeed, the current increase in price has led to petrol price climbing to N1,030 and N998 per liter in Abuja and Lagos.

Chinedu Ukadike, spokesperson for the Independent Petroleum Marketers Association of Nigeria (IPMAN), said the price hike marks the beginning of total deregulation of the oil and gas sector and implementation of the Petroleum Industry Act.

According to him, “The removal of subsidy is a welcome development, as it will encourage investment in the sector and ensure efficient supply chain management.”

He, however, said NNPCL and Dangote Refinery are yet to release their ex-depot prices, crucial for determining marketers’ selling prices.

“Once the ex-depot prices are released, we will choose where to buy our petroleum products and stock our filling stations,” he said.

Newstide247.com had reported that the pump price of petrol has been increased by the Nigerian National Petroleum Company Limited (NNPC Ltd) to N1,030 per litre at its outlets in nationwide.

This price hike was noticeable on Wednesday, as the NNPCL ended its exclusive purchase agreement with Dangote Refinery, marking a significant shift in Nigeria’s fuel market.

Indeed, report had stated that NNPC would no longer be as the sole buyer of petrol from Dangote Refinery.

Consequently, the refinery is now free to sell its products to other marketers who can purchase fuel directly.

This will create competition in a deregulated market where prices will be negotiated on a “willing buyer, willing seller” basis.

A visit by our reporter to one of NNPC outlets in Lagos showed an adjustment in petrol price to N1,030 per litre.

In September, NNPC ssid it purchasef petrol from Dangote Refinery at N898.78 per litre and sold to marketers at N765.99 per litre, effectively subsidizing the product by N133 per litre. However, the company has since declared that continuing the subsidy was unsustainable, leading to the current market adjustment.

Between September 15 and 30, NNPC lifted approximately 103 million litres of petrol from Dangote Refinery, a small fraction of the 400 million litres originally planned for that period. Only 2,207 out of the 3,621 trucks sent to the refinery were loaded, resulting in a 26% delivery performance, as revealed by records seen.

There is no doubt tbat the latest phase has implications for Nigeria’s downstream oil sector as marketers gain direct access to the Dangote Refinery. However, it also raises concerns over how consumers will cope with the surging fuel prices in an already challenging economic environment.