Dennis Mernyi
Hard times may be waiting for Nigerians as stakeholders have declared that the increase in the price of petrol is imminent. Petroleum industry stakeholders have given insight into factors that will trigger the price in a very short period.
Already, the Nigerian National Petroleum Corporation (NNPC) has claimed it has been borrowing over N905.27bn to pay for a subsidy this year alone.
This and other claims like the $83.39 per barrel price of crude among other factors they say will possibly jack up the price of petrol.
Several other factors are currently determining the price of petrol, diesel and LPG in Nigeria, including the international price of Brent Crude oil, which currently stands at $82.39 per barrel. This represents a massive rise in price as the resource was trading at less than $30 per barrel a few months ago.
Another factor is the Federal Government’s Petroleum Industry Act, PIA, which is set to remove subsidy that has bled Nigeria of over N1.2-trillion ($2.9-billion) in costs since the scheme was reintroduced in 2021. The government’s plan to remove subsidies may provide more money for budget implementation but may also worsen the plight of consumers at the pumps.
Minister of State for Petroleum Resources, Timipre Sylva, said recently in Abuja that there won’t be an option to fully deregulate the downstream (opening the downstream sector to competition as well as removing entry barriers in the distribution and supply of petroleum products), a move that would increase the current N162 ($0.39) per litre petrol price to about N350.
This comes as the NNPC appealed to tanker drivers to halt a proposed plan to embark on strike action due to the poor state of Nigeria’s road network as well as the increasing cost of diesel and vehicle spare parts.
The NNPC had also cautioned Nigerians against panic buying of products assuring that there is the stock of about 1.7 billion metric tonnes of the product that can serve the country in the quarter.
But Comrade Clement Isong, Executive Secretary of Major Oil Marketers Association of Nigeria (MOMAN) regretted that the government through the NNPC has been bearing the cost of the subsidy which we are told may go as high as N2.9tr a year. According to him, “this cost is unsustainable. In effect, the government is borrowing money to pay this subsidy”.
Prices of fuel according to him will not increase until the government implements the deregulation policy which will not be this year. We do not anticipate a price increase any time soon and not this year.
He observed that increase in fuel price has some disadvantages but also has some advantages. For example, reduction in consumption. We are consuming more than we can afford. We can use the savings for education, healthcare and many more. I would therefore not describe it as a crisis. It is more of a realignment of our priorities as a nation.
“Government should also mitigate the worse effects of the price increase through improvements in the transportation infrastructure and interventions.
“This money could be better spent on investments in human development such as education, healthcare and infrastructure that will yield a return on investment and grow the economy. Government policy today is to stop paying that subsidy so the price of PMS will go up at some point”, he stated.
The government he suggested can invest in the procurement of more trains, buses, and good roads in all urban centres to cushion the effect.
Though he foresees an imminent fuel price increase, he noted that “we do not anticipate price increases any time soon and not this year”.
Buhari leaves Paris for Intra African Trade Fair in South Africa
There have been clashes of interest between the minister of State for Petroleum Resources specifically regarding charges due to the Nigeria Ports Authority and Maritime Administration and Safety Agency NIMASA under the Petroleum Products Pricing and Regulatory Agency (PPPRA) templates [now Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDR).
It was gathered that the port levy which is in dollars has added significantly to the cost of the product, the development which caused the Presidency sometime in 2018 directed the NPA and the Nigeria NIMASA to be collecting naira from them instead of dollars yet the directive has not been implemented.
