Nigerians continue to struggle with petrol scarcity as the landing cost of Premium Motor Spirit (PMS), commonly known as petrol, has skyrocketed to N978 per litre, according to findings by BusinessDay.
At the black-market rate of N1,500 per dollar, the landing cost of petrol, which includes the international price, shipping, insurance, and other charges, has increased to N978 per litre from N720 per litre in October 2023.
“The rising landing cost of petrol is a result of the escalating FX crisis. There are market interventions through subsidies, as most Nigerians cannot afford the market price for petrol,” said a senior executive in the downstream sector.
On Monday, the naira hit a three-month low of N1,530 per dollar on the parallel market, following renewed demand pressure for the greenback by end users. This represents a 0.65 percent (N10) loss compared to the N1,520 quoted on Friday on the black market. The local currency was quoted at N1,573 per dollar on July 9, 2024, according to data from FMDQ.
Aisha Mohammed, an energy analyst at the Lagos-based Centre for Development Studies, noted that the commodity is being partially subsidised by the government for political, social, and economic reasons.
“All of us who were saying that they should remove the subsidy, we can see that they have partially removed it now, but look at the consequences. Economically, it will sound good, but socially and politically, it is very costly,” Mohammed said.
Further findings showed the landing cost of N978 does not include Nigerian Ports Authority charges, vessel charges, the Nigerian Maritime Administration and Safety Agency charges, and other distribution costs.
Some of these are charged in dollars, and some experts are calling for a review to reduce petrol costs.
“We must resist the dollarisation of the Nigerian economy. There are some fee collections in dollars that are also pushing up the landing cost of petrol,” a source said.
Efforts to get Olufemi Soneye, chief corporate communications officer at Nigerian National Petroleum Company Limited (NNPC), to confirm if the federal government has reverted to petrol subsidy proved abortive.
President Bola Tinubu, during his inaugural speech on May 29, 2023, declared that subsidy on petrol was gone, a declaration that was effectively implemented the next day by the NNPC.
Before Tinubu’s declaration, the pump price of petrol was below N190/litre. However, it jumped to over N500/litre after the president’s statement, and moved up again to over N600/litre a few weeks later.
While the federal government has repeatedly denied the payment of any subsidy on petrol, a report submitted to President Tinubu by the finance minister, Wale Edun, and seen by BusinessDay showed the government’s projection on subsidy.
According to the report, fuel subsidy is projected to gulp about N5.4 trillion in 2024 as against the N3.6 trillion budgeted for the same intervention in 2023.
The finance minister, Edun, told reporters also that subsidy removal is an ongoing process, suggesting that a complete removal is not yet achieved.
“It is an ongoing conversation, it is an ongoing process of ensuring that fuel subsidy that fuel subsidy is eliminated from the Nigerian economy, that is what Mr. President intent is and that is what is being worked towards,” Edun said in an interview May.
On Tuesday, motorists spent hours in queues at the few filling stations dispensing petrol, while black marketers took advantage by raising their prices to between N1,000 and N1,100 per liter. Some retail outlets increased the pump price to N900 per liter, especially in Abuja, Nasarawa, and Niger.
The NNPC Limited explained that the queues were due to recent thunderstorms and logistics challenges that disrupted activities at fuel-loading jetties. However, the company stated that it is working with stakeholders to resolve the situation and clear the queues.
Reacting to this, Billy Gillis-Harry, president of the Petroleum Products Retail Outlets Owners Association of Nigeria, confirmed that the NNPC had assured marketers that the issue was being addressed.
However, he explained that the queues might not disappear in the next few days, noting that locations far from major depots would experience longer periods of fuel queues.
“Once they start loading, it takes some days to clear the queues. And don’t forget that filling stations in Abuja get products from Lagos, Oghara, Warri, Port Harcourt or Calabar, and that takes more than three days turn-around time to accomplish,” he stated.
On whether the situation is being resolved as stated by NNPC, Gillis-Harry said, “Yes, it is being addressed and we’ve had an in-depth review of the matter. They’ve assured us that they are working on it and so we should be able to get products in our retail outlets.
“We could see what their challenges were, but during our conversation, we were able to know that NNPCL is working hard to tackle this situation. So, we are certain that in the coming days petroleum products should be available and circulate widely.”
