In response to a recent drop in the value of the Nigerian naira against the United States dollar, oil marketers have raised concerns about a potential hike in the pump price of Premium Motor Spirit (petrol). The local currency’s decline from 900 naira to 920 naira against the dollar on the black market prompted speculation about the sustainability of the current petrol price.
Oil dealers and marketers have suggested that the current exchange rate of 920 naira per dollar could impact the pump price of petrol, which stands at 617 naira per litre. They project a potential increase to between 680 naira and 700 naira per litre, considering the exchange rate and the initial cost of petrol when the exchange rate was higher.
Although the Federal Government has maintained that there will be no increase in petrol price, oil marketers imply that the government might be secretly subsidizing the commodity due to the exchange rate reality. This suggests that the government could be spending around 90 naira per litre as subsidy because of the naira’s depreciation against the dollar.
The ex-depot price of petrol was approximately 585 naira per litre, and if the projected cost of 680 naira per litre becomes a reality, the government’s potential subsidy expenditure could be about 95 naira per litre.
Last week, the Nigerian Midstream and Downstream Petroleum Regulatory Authority disclosed that daily petrol consumption in Nigeria reached around 52 million litres. This, coupled with the projected subsidy of 95 naira per litre, could result in the government spending an estimated 153 billion naira monthly on fuel subsidy.
The President’s Special Adviser on Media and Publicity, Ajuri Ngelale, reiterated the government’s commitment to keeping petrol prices stable, despite market concerns. The NNPC Retail, the downstream subsidiary of NNPC responsible for retailing petroleum products, also confirmed its intention not to increase PMS pump prices.
As the naira’s value against the dollar continues to decline, the issue of petrol pricing remains a topic of economic discussion and concern for stakeholders in the oil and gas sector.
