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Nigeria May Consider Increasing Petrol Price To N180 Per Litre

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Nigeria May Consider Increasing Petrol Price To N180 Per Litre

Strong indications have emerged that the federal government of Nigeria may consider increasing the price of Premium Motor Spirit (PMS), popularly called petrol to a minimum price of N180 per litre and above anytime soon.

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who hinted this in Abuja on Thursday, said the current price of N145 per litre can no longer be sustained.

The Nation reports that during a presentation he made to a joint committee on Petroleum (Downstream) of the Senate and the House of Representatives, the Minister said the landing cost for petrol stood at N171 per litre.

According to him, the Federal Government, through the Nigerian National Petroleum Corporation (NNPC), has been bearing the cost of N26 per litre, representing the difference between N171 and the current official price of N145 per litre.

The minister also stressed that independent marketers would not be able to import the product at the current foreign exchange rate, adding the marketers were able to sell for N145 per litre when the exchange rate was N285 per Dollar. The Naira presently exchanges for N365 per Dollar.

“We now have to go back and find the solution to this problem in order to ease supply gaps and ensure availability of the product at all times,” the Minister said.

Kachikwu, however, proffered three alternative solutions to pump price increase: getting the Central Bank of Nigeria (CBN) to introduce a modulated foreign exchange rate specifically for importers of the product; giving the marketers significant tax adjustments to enable them to absorb the high cost; and a plural pricing system whereby the NNPC would continue to sell at N145 through its numerous outlets while the marketers are allowed to fix their own price.

The Minister identified causes of the last fuel scarcity to include diversion of products, logistic constraints, bottleneck associated with clearance, bad road network, insufficient product reserves, smuggling through land borders, supply gaps and enforcement challenges.

He stated that the marketers stopped importing fuel since October 2017, as a result of their inability to access foreign exchange from the CBN, leaving only the NNPC to import the product, which has left a wide gap between demand and supply.

Speaking on the way forward, the Minister canvassed the opening up of production lines, specifically the refineries, which he said, would address supply gaps that usually leads to incessant scarcity.

“Rising prices in international market affecting domestic prices. What the country needs is to have the refineries working. It’s a shame that after 40 years, Nigeria cannot produce its domestic consumption.

“It would take 18 months to address problems of scarcity, price stability and other issues relating to the supply of petroleum products. The pipelines should be concessioned to allow private participation.

“There is huge infrastructure deficit in the system because the NNPC ought to be distributing products through their pipes but most of the pipes are damaged. The has necessitated the use of trucks to distribute the product across the country.

“Most importantly, fixing the refineries should be the lasting solution. To discuss and address the issues, we have to seek approval from the President,” the Minister said.

We had earlier quoted The Punch as saying that oil marketers on Wednesday agreed with the Federal Government to allow the pump price of petrol to remain at N145 per litre, a move that reverses their previous stance on the pricing of the commodity.

This is after the Chairman, Depot and Petroleum Products Marketers Association, Dapo Abiodun, had on Tuesday disclosed that the marketers could no longer import petrol at a controlled price of N145 per litre.

Bukunmi Oyelude

I'm what they call "The Quadruple" - I'm a minimalist, a conspiracy theorist, a budding writer, and an info nerd. I operate under the auspices of me. Nerd not noob.

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