Nigerians should brace themselves for yet another increase in petrol prices due to the combination of rising crude oil costs and the weakening value of the naira against the US dollar.
Oil marketers have emphasized that both the price of crude oil and the exchange rate of the dollar constitute over 80 per cent of the petrol cost. Brent crude, the international benchmark for oil, reached $94 per barrel, its highest point in 2023. Although the Federal Government and the Nigerian National Petroleum Company Limited maintain that petrol subsidies have ended, industry insiders argue that the government is, in effect, applying a form of subsidy.
The National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, stressed that petrol prices were below what they should be due to the recent increases in the dollar and crude oil prices, essentially indicating that a form of subsidy exists in the current pricing model. Furthermore, the disparity between the official and parallel exchange rates is expanding, further contributing to the need for the government to maintain some level of subsidy.
Ukadike also highlighted the challenges faced by investors trying to import petrol, stating that they struggle to recoup their investments after purchasing dollars in the parallel market. In light of this, he urged the government to be transparent in its approach to the removal of petrol subsidies so that competition within the industry can thrive.
