Oil marketers in Nigeria have warned that the recent surge in crude oil prices and the depreciation of the country’s currency, the naira, against the United States dollar could result in an increase in the pump price of Premium Motor Spirit (PMS), commonly known as petrol.
The global benchmark for oil, Brent crude, reached $94 per barrel, the highest figure in 2023, contributing to concerns over fuel costs.
The naira has weakened significantly, hitting N950/dollar on the parallel market.
Although the government has claimed that the petrol subsidy has ended, industry operators argue that quasi-subsidies are being quietly implemented due to these rising costs, and this could potentially lead to a price hike at the pump.
The situation is causing challenges for the transportation sector and raising questions about the government’s stance on subsidies.
Marketers Concerned About Rising Costs
Dealers in the downstream oil sector have explained that the cost of crude oil and the exchange rate of the dollar account for over 80 per cent of the cost of PMS.
With Brent crude prices surging to $94 per barrel and the naira weakening to N950/dollar, the financial strain on the government to subsidize petrol prices has increased.
The Nigerian Association of Road Transport Owners (NARTO) expressed concerns that the price cap on petrol was making it difficult for marketers to cover transportation costs.
Divergent Views on Subsidy Reintroduction
While the Federal Government and Nigerian National Petroleum Company Limited (NNPCL) have claimed that the subsidy on petrol has ended, industry players argue that quasi-subsidies are being implemented due to rising costs.
The government has not been transparent in its approach, and some believe that a clear policy direction is needed. The National President of NARTO, Yusuf Othman, emphasized that the government should consider the pump price of PMS to enable marketers to adjust transportation prices.
As the situation unfolds, there are growing concerns about the impact of these rising costs on the Nigerian economy and consumers.