Further Petrol Price Hike Imminent Over Rise In FX

There are strong signals that an increase in the price of Premium Motor Spirit (PMS), also known as petrol is imminent.

The anticipated hike, players note, is primarily driven by a rise in the exchange rate of the dollar to the naira, coupled with escalation in the global price of crude oil.

As these economic factors converge, consumers in Nigeria may soon face higher fuel costs, reflecting the interconnected nature of international markets and local economies.

The naira showed further signs of weakness last week, closing the market at N1,700 from N1,600 to $1, a development that is set to affect retail fuel prices.

Brent, the global benchmark for crude, hit $78.04 per barrel on Sunday, up from $74.05 per barrel on September 23, 2024.

More so, there are concerns that a widening regional conflict in the Middle East could disrupt global crude flows. Market fears are rising over the possibility that Israel might target Iranian oil infrastructure, which could provoke retaliation.

President, Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN), Mr. Billy Gilly-Harry, told Daily Sun that the hostilities in the Middle East will definitely impact petrol prices in the coming days.

He explained that, at the moment, vessels are changing their routes as a result of the crisis in the Middle East, thereby causing an increase in shipping costs, which will subsequently impact prices.

“As an association, we have taken cognizance of the impact of this crisis on fuel costs, and I can tell you categorically that this will lead to an upward review of fuel prices. Certainly, the landing cost of fuel will go up. But what I cannot say is what that cost will be,” he said.

Chief Executive Officer of Pinnacle Oil and Gas Limited, Mr. Robert Dickerman, said the global market price for any oil commodity is dollar-based and must be converted to naira at the naira/USD exchange rate.

He added that the large majority of price increases we have seen in the past year are not because of government policies, price gouging, or product hoarding, nor are they due to an increase in the price of crude oil, but are due to the fall in the value of the naira.

“Every drop in naira value raises the cost of anything imported or market-priced, whether it is gasoline, manufactured goods, or food,” he said.

Dickerman said Nigeria must address the root of the problem, which is how to restore global confidence in Nigeria’s economy and currency, create foreign investment in jobs and local production, increase tax revenue, and achieve fiscal prudence, saying that is the only way to lower petroleum product prices in Nigeria.

The impending fuel price hike, according to industry observers, may have forced the Nigerian National Petroleum Company (NNPC) Ltd to shut its petrol payment portal against fuel marketers.

Spokesperson for the Independent Petroleum Marketers Association of Nigeria (IPMAN), Mr. Chinedu Ukadike, said that marketers have more than 2,000 pending tickets for the purchasing of 45,000 liters of petrol, warning that the situation may lead to another round of fuel scarcity nationwide.

“I can’t confirm the price now because the portal is still shut down.

“We have more than 2,000 tickets for 45,000 liters (of petrol). That is 45,000 multiplied by 2,000; you can now know the number of million liters it will be. This is just an estimate; you know I don’t work with NNPCL, and I don’t know what is on their system.”

He added that a 45,000-litre truckload of PMS is around N39.5 million, making N79 billion when multiplied by 2,000.

Some of the marketers at the Apapa depot who spoke to Daily Sun in confidence expressed concerns that the development could hamper the fragile fuel distribution chain, leading to shortages in the weeks ahead.

They said any disruption in the fuel supply chain is a potential threat for a fuel crisis and therefore called on all relevant stakeholders to address whatever challenges that may want to rear their ugly heads.

But in a separate reaction, the National Vice President of IPMAN, Mr. Hammed Fashola, in a telephone interview with Daily Sun on Friday (yesterday), said there is no cause for worry, assuring that as long as the tickets which are already in the custody of NNPC Ltd are being serviced, there would be no disruption.

He maintained that the portal closure against fresh payment by NNPC Ltd was taken in the best interest of the market, saying there was no point in holding on to the business funds of marketers when there was a backlog to clear.

“It is better to allow the funds to be in the hands of marketers to enable them to use it for other things, rather than holding on to it when there won’t be immediate supply.”

In his reaction, the spokesperson of NNPC Ltd, Mr. Olufemi Soneye, who confirmed the shutdown of the portal, assured stakeholders that it would be opened as soon as they clear the backlog.

He said that the portal closure was intended to prevent the company from holding marketers’ funds for an extended period.

“We have a significant backlog to address. The closure is intended to prevent us from holding marketers’ funds for an extended period.

“It will be reopened once the backlog has been sufficiently reduced. We are working to address it as soon as possible.”