On Thursday, sources told BusinessDay that the federal
government has given approval to the Nigerian Midstream and Downstream
Petroleum Regulatory Authority for an upward review of the official retail
price of petrol from a range of N165-170 to N180-N185.
It was learnt that the increase is to compensate for the
current market realities associated with escalating foreign exchange and high
lightering charges such as the cost of chartering shuttle vessels for the
discharge of petrol.
Confirming the development, a senior oil executive in the
downstream sector said the major oil marketers have adjusted their pump price
to the new price of N180-N185.
He, however, said the market demand is much bigger than what
majors marketers alone can supply.
“The federal government is reacting a little too late. The
current system shows the black market will constitute to control petrol price,”
he said.
Mike Osatuyi, national controller of operations at the
Independent Petroleum Marketers Association of Nigeria, said the government’s
decision to increase the price to N185 means nothing if the regulators do not
fix the supply challenges.
“Most of my members are struggling to get products from
NNPC’s depot; we are currently in a messy situation with supply despite the
increase in pump price,” Osatuyi told BusinessDay.
Another source familiar with Nigeria’s petrol distribution
chain said the poor inland supply and high petrol demand means that the
country’s black market continues setting the price of petrol.
“Markets do not like distortions; there is a limit to how
the federal government can manipulate prices,” the source said.
A Lagos-based marketer told BusinessDay he makes N3 million
more if he sends his truck to the East rather than sell it at his filling
station.
“If I send it across the border to Benin, I make N6 million
more,” he said.
BusinessDay’s findings last night showed that the pump
prices of petrol at filling stations now sell between N200 and N300 per litre
in most cities across Lagos, Nigeria’s commercial capital.
At the black market, however, the findings showed that the
product sells for between N350 and N480 per litre at Ajah and Victoria Island;
N450 at Ejigbo and other cities in Lagos, and N350 in Owerri and Umuahia
yesterday.
Other experts say the monopoly of the Nigerian National
Petroleum Company Limited as the sole importer of petrol has contributed to the
abuses and arbitrage in the system.
“The meagre margins to marketers, and the subsidy that has
boosted smuggling of the imported petrol to other neighbouring countries where
petrol is sold higher,” Charles Akinbobola, energy analyst at Lagos-based
Sofidam Capital, said.
At the World Economic Forum in Davos, Switzerland, Zainab
Ahmed, the minister of finance, budget, and national planning, listed “fear of
worsening the economic situation of Nigerians” as the main reason why her June
2022 deadline to remove the fuel subsidy was not actualised.
She suggested that instead of waiting for the next
administration to remove the fuel subsidy, the current administration can take
the step by initiating a gradual removal by the “beginning of the second
quarter.”
“Subsidy costs should not exceed N3.2 trillion,” she said.
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