Despite falling landing costs, Nigeria sees sharp increase in petrol prices

Although the landing cost of petrol in Nigeria has dropped by over 20%, the retail price has surged sharply by 71.79%, causing concern over the impact of deregulation, inflation, and exchange rate fluctuations on the economy.

Nigeria has experienced a notable reduction in the estimated cost of landing Premium Motor Spirit (PMS), commonly known as petrol, over the past three months, with the cost dropping by 20.34% to N971.57 per litre.

This decrease reflects a stabilisation in global market fluctuations and supply chain improvements.

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However, despite this reduction, the retail price of petrol has skyrocketed, increasing by N443 (71.79%) from N617 per litre on August 1, 2024, to N1,060 per litre by November 8, 2024.

According to data from the Major Energies Marketers Association (MEMA), which was published in its daily energy bulletin, oil marketers imported petrol at N1,219 per litre in August 2024, based on a Brent crude oil price of $80.72 per barrel and an exchange rate of N1,611 per dollar. During this period, the retail price remained at N617 per litre.

In contrast, by November 2024, the estimated landing cost had dropped to N971.57 per litre, reflecting a Brent crude price of $75.57 per barrel and an exchange rate of N1,665.84 per dollar, yet the retail price at the Nigerian National Petroleum Company Limited (NNPCL) stations stood at N1,060 per litre and at independent marketers’ stations at N1,180 per litre.

While the landing cost declined from N945.63 per litre in September and N903.64 per litre in October, the retail price increase can be attributed to a combination of factors, including the ongoing deregulation of the fuel market, fluctuations in the exchange rate, rising inflation, and broader economic challenges.

These issues have caused a mismatch between the falling import costs and the rising prices at the pump.

Experts have indicated that the reduction in landing cost could lead to a corresponding drop in retail petrol prices.

However, this has not yet materialised, and the situation has led to increasing dissatisfaction among Nigerians. In response, the Nigeria Labour Congress (NLC) has accused fuel marketers of inflating petrol prices.

The NLC claims that the retail price is significantly higher than what the actual market value would suggest, and it highlighted the suffering and economic hardship many Nigerians are facing as a result of the rising fuel prices.

In a communique issued after its National Executive Council meeting, the NLC expressed concerns over the impact of government policies, such as fuel price deregulation, which are exacerbating poverty and pushing many citizens into destitution.

The labour union’s statement calls for greater accountability from both the fuel marketers and the government to protect citizens’ welfare and ensure fair pricing in the fuel market.

As the Nigerian economy continues to grapple with these challenges, the issue of fuel pricing remains a critical point of contention, with many calling for a more transparent and balanced approach to the country’s fuel pricing structure.