Global Affairs Magazine

Pressure On Petrol, Diesel Prices As Crude Hits $97.17

Pressure On Petrol, Diesel Prices As Crude Hits $97.17
  • PublishedSeptember 21, 2023

There are indications that pressures are mounting on the pump price of petrol as the landing cost has risen by 19.3 per cent to N596.93 per litre as of yesterday, from about N500 per litre in July 2023, when the last pump price adjustment was effected across all retail outlets in Nigeria.

Petroleum marketers attributed the development to the continued rise in crude oil prices in the international market as well as exchange rate volatility in Nigeria’s foreign exchange market which was N970 to the dollar yesterday.

It was reported that the rise in crude oil prices by 7.5 per cent to $85.89 per barrel in August 2023, from $79.92 per barrel in July 2023, depreciation of the Naira to N775/dollar in the official market and inflation, standing at 22.79 per cent, combined to increase the landing cost of petrol to over N500 per litre in the domestic market.

But the further rise in the price of crude oil (Bonny Light) by 14.3 per cent to $97.17 per barrel, yesterday, from $85 per barrel last month and the current N773.98/dollar in the official market increased the cost pressure which the marketers believe would force the government to consider further upward adjustment to the pump price as subsidy mounts.

Details of marketers’ transactional analysis obtained by newsmen, yesterday, put freight (Lome-Lagos), Port charges, Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA levy, storage cost, Marine insurance and tendering cost stood at N10.37, N7.37, N4.47, N2.58, N0.47, N0.36 and N0.06 per litre respectively.

The analysis stated that at N773.98/dollar, marketers need N20.4 billion to import 37.5 million litre of the product and stand the risk of losing N260 million while generating N22 billion as sales revenue, due to the government firm control over price.

However, many marketers, who find it difficult to access foreign exchange in the official market also consider the black market where N960/$ is obtainable.


The transactional analysis, based on N960/$ put freight (Lome-Lagos), Port charges, Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA levy, storage cost, Marine insurance and fendering cost stood at N10.37, N7.37, N4.47, N2.58, N0.47, N0.36 and N0.06 per litre respectively. Providing further details, the transactional analysis noted that fuel importers interested in importing 37.5 million litres of petrol should have the capacity to pay N27.5 billion as landing cost.

Marketers see losses

Despite deregulation targeted at removing hindrances in the domestic market, the transactional analysis stated that cost recovery and profit are not guaranteed as the government would not allow any further increase in price.
As a result of the government influence, the analysis noted that potential importers would risk suffering different losses, depending on the different price scenarios.

In areas where petrol costs N560 per litre, it stated that importers would generate more than N21 billion as sales revenue while suffering a loss of N6.5 billion in the process of marketing the 28 million litres in Nigeria.

Based on N565 per litre scenario, it explained that importers would generate N21.2 billion as sales revenue and suffer a loss of N6.3 billion, adding that at N570 per litre, they stand to generate more than N21.4 billion from sales while losing N6.2 billion in the process of marketing the 28 million litres of petrol.

Marketers, who have heeded to the caution, said it would be unprofitable to import at current pump price as returns on investment cannot be guaranteed.

Diesel price adds to the pressure

Petrol marketers under the aegis of Natural Oil and Gas Suppliers’ Association of Nigeria (NOGASA), have called for government intervention, adding that they can no longer sustain the distribution of petrol and other products nationwide as the price of diesel used to power their trucks has risen to N1,100/litre in many locations, from over N700 early this year.

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In a statement, the association’s president, Mr Benneth Korie, said that diesel has witnessed incessant hike in prices in recent months, a development he said has been worsened by marketers’ inability to secure cheap bank loans.

“NOGASA is worried about the ugly development and trying to understand why prices of diesel are going as high as N950 to N1,100 per litre in the market with a view to moderating the prices and shocks in the economy,” the statement read.

While lamenting that the rapidly rising diesel price was evidently causing hardships in haulage transportation and commuting alike, Korie called on the government to intervene before the sector gets grounded and derails the anticipated growth.

Aviation fuel hits over N1,000

According to the Chief Operating Officer, of United Nigeria Airlines, Mr Osita Okonkwo, “Aviation kerosene also known as Jet A1 is available in the market. But the volatility of the price remains our greatest challenge.

“Price does change weekly. Currently depending on your location, sourcing the product from Lagos, is around N950, while other locations are between N950 to N1050. Our major issue now is on how to pass the rising price to travellers patronising us.”

Importation to end Dec 2023 — Marketer

Meanwhile, the President, Independent Petroleum Marketers Association of Nigeria, IPMAN, Elder Chinedu Okoronkwo, raised hope that the prolonged era of Nigeria’s fuel importation would end in November this year.

He stated: “There will be no need for us to import petrol anymore by the time the Nigeria National Petroleum Company Limited, NNPCL Port Harcourt refinery starts operations in December 2023. Also, Dangote refinery will start operations by November 2023. With this in place, it will reduce reliance on foreign exchange and as well give more value to our naira”.

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FG should address high energy cost — CPPE

However economy experts are concerned about the implication of the sustained energy crises on the entire economy and have called for a lasting government action.

The Director/CEO the Centre for the Promotion of Private Enterprise, CPPE, Dr. Muda Yusuf, said: “We should address the escalating energy cost – diesel, gas and aviation fuel. There should be generous tax cuts on energy and power solutions and products to moderate energy costs. We need to support the small businesses with business development skills as well as technical skills.”

We need to shift to CNG, others — NGA

Similarly, in a response to Vanguard, the Nigerian Gas Association, NGA, the umbrella body and the lead voice of the operators and players in the country’s entire gas value chain, stated: “Gas for the transportation sector and also for users of small generators, whether powered by Liquefied Petroleum Gas or Compressed Natural Gas (CNG), is one of the most affordable, available, safe, and reliable fuels that also substantially addresses global carbon emission concerns and the wellbeing of the environment.

“To achieve this, the NGA urges the Federal Government to revisit and accelerate the implementation of the Nigerian Autogas Policy launched two years ago as part of the National Gas Expansion Programme (NGEP) under the well-articulated Decade of Gas Policy and Programme.”

Govt should work to achieve economic stability — OGSPAN

However, the National President, Oil and Gas Service Providers Association of Nigeria, OGSPAN, Mazi Colman Obasi, “Generally, the nation’s has been very unstable. The government should work towards achieving stability expected to enhance planning and investment.”


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