Petrol Prices Set to Soar: Nigerian Oil Marketers Predict N700/Litre
Oil marketers are forecasting an increase in the pump price of petrol to potentially surpass N700 per litre in Northern Nigeria starting from July. According to Mike Osatuyi, the National Controller Operations of the Independent Petroleum Marketers Association of Nigeria, prices could surge beyond N700 in the northern region once independent marketers commence product imports next month.Osatuyi explained that residents in the northern states might pay as much as N700 and above for one litre of petrol, while those outside Lagos should expect to pay around N610. In Lagos, residents are likely to pay approximately N600 per litre. He attributed the expected price hikes to factors such as the exchange rate, the current crude price in the international market, and the landing cost of the products.He stated, “What I am seeing is around N600 and above, depending on the exchange rate, the current crude price at the international market and the landing cost. Those in Lagos will pay around N600, those outside Lagos around N600 plus, while those in the north would be paying anything from N700 and above.”The downstream sector is currently awaiting fresh petroleum products as the Nigerian Midstream and Downstream Petroleum Regulatory Authority continues to license operators interested in the importation business. Olufemi Adewole, the Executive Secretary of the Depot and Petroleum Products Marketers Association of Nigeria, confirmed that the NMDPRA is currently granting licenses to more importers.Adewole emphasized that prices would depend on market fundamentals, while also highlighting the issue of product smuggling to neighboring countries. He pointed out that any costs incurred by marketers would be added to the landing cost and, consequently, to the pump price, along with the necessary profit margin.Tunji Oyebanji, a former chairman of the Major Oil Marketers Association of Nigeria and the CEO/Chairman of 11 Plc, suggested that consumers should anticipate new pump prices similar to those of diesel and neighboring African countries that also import petrol. He cited the current prices of petrol in Ghana, Cameroon, and Benin, which were already above N800 per litre as of June 19.Oyebanji acknowledged the possibility of a price reduction depending on the exchange rate, highlighting that healthy competition would emerge among marketers. He said, “The bottom line is that there will be an adjustment in price. Yes, it may go up now, it could also drop depending on the exchange rate. But the good thing is that products would be everywhere, and if you see that yours is more expensive than those of the filling stations around you, you will be forced to bring down prices so customers can come and buy. There would be healthy competition which is good for the market.”Osatuyi referred to the current petrol price as a “transitional price” and expressed expectations for a roadmap from the Federal Government following subsidy removal. He stated, “We are expecting the roadmap from the Federal Government following the meeting with labor. Labor has said they are giving the government two months to come up with the roadmap. We are also expecting the roadmap on how to deepen the use of Compressed Natural Gas.”Since the Federal Government’s announcement regarding the deregulation of the downstream market on May 29, petrol prices have surged above N490 per litre at stations affiliated with the Major Oil Marketers Association of Nigeria and above N500 at IPMAN stations across the country.Despite the presence of products in the country, the recent foreign exchange policy of the central bank has caused the naira to rise to around N765/$1, thereby potentially affecting the business. Oyebanji indicated that depot owners are resorting to both local and foreign loans to finance importation.The removal of fuel subsidies in Nigeria has had repercussions beyond its borders, as black market fuel vendors and commercial drivers in Cameroon, Benin, and Togo have experienced collapsed businesses due to low supplies and high prices.In Benin and Togo, smaller nations west of Nigeria, contraband fuel vendors have lost both supplies and customers, while official petrol stations have seen a sudden surge in demand. The report by Reuters highlighted the challenges faced by fuel vendors and the impact on the local transportation sector.Critics of the Federal Government’s deregulation move, such as energy expert Bala Zaka, argue that Nigeria’s weak economy cannot sustain deregulation and express concerns about the depreciation of the naira. Professor Tella Sheriffdeen, an economist at Olabisi Onabanjo University, advised the government to prioritize domestic refining and adopt alternative strategies to ensure fuel availability.As Nigeria braces for potential petrol price increases in the coming months, the government’s response and actions in the downstream sector will play a critical role in determining the future of fuel prices and availability across the country.