As the Nigerian National Petroleum Corporation (NNPC) reportedly unofficially resumes subsidy payment (under recovery) there were indication that some fuel stations in Lagos have taken advantage of the confusion to jack up their pump price to N170 per liter.
This came as queue has returned in some petrol station visited by Sunday Telegraph in parts of the Amuwo Odofin area of Lagos State as consumers rush to buy out of fear that the price of the product would soon hit the roof.
The price of Nigeria’s Bonny Light had risen to $63.11 on Wednesday in the international market, causing the landing cost of petrol in Nigeria to rise to N180 per liter. Meanwhile, contrary to speculations last week that the pump price would be jacked up by the Federal Government in line with its avowed commitment to total deregulation of the downstream sector of the nation’s oil/gas industry, NNPC announced that the pump price remains unchanged in March even as some fuel stations in Lagos had unofficially started selling the product at N170 per liter.
Prices will remain the same in “order not to jeopardize ongoing engagements with organised labour and other stakeholders on an acceptable framework that will not expose the ordinary Nigerian to any hardship,” Kennie Obateru, spokesman of NNPC said in a statement Monday.
It is the third straight month that prices haven’t moved. However, queues of vehicles formed outside some filling stations in Lagos this week, an indication that the NNPC could be running low on stocks and consumer are already panicking. This often occurs when the cost of subsidies become unbearable for the government. The NNPC warned “marketers”, the firms that buy gasoline from the company and sell to consumers, not to hoard the product.
There is “enough stock of petrol to keep the nation well supplied for over 40 days,” the NNPC said. The Federal Government seized the opportunity of the collapse in oil prices last year to remove subsidies on fuel that made the product one of the cheapest globally. Minister of State for Petroleum Resources Timipre Sylva said in September that Nigeria expected to save as much as N1 trillion ($2.4 billion) a year after abolishing the support that the state has provided since the 1980s.
The NNPC is the sole importer of petrol in the country and is taking the hit by not increasing the price at which it sells to the firms that distribute the fuel around the country.
The pump price of petrol should be about N200 per liter, compared to just N165 per liter that it retails at, according to Tunji Oyebanji, the Chairman of the Major Oil Marketers Association of Nigeria and chief executive officer of 11 Plc, a large operator of filling stations.
“I don’t see how NNPC can survive if it has to finance that kind of gap,” Oyebanji said in a speech on Feb. 25. Nigerian spent N10.7 trillion on fuel subsidies in the last 10 years, including N750 billion in 2019, according to Oyebanji. The NNPC could pass these costs as extra income on to the government if customers paid marketdriven prices for petrol, supporters of deregulation have argued.
Landing cost hits N180 per liter
The landing cost of the product rose from N151 to N180 per litre, due mainly to rising price of crude oil in the international market.
The rise of crude oil price from $58 to more than $63 per barrel, yesterday, culminated in refiners incurring additional cost in the process of procuring, refining and supplying petrol to consumers, thus causing marketers to also incur additional cost, especially as a bulk of the product is currently imported into the country.
Nevertheless, it was gathered that the pump price could rise from N162 to about N190 per litre when the marketers’ margins and other considerations are added. However, the Nigerian National Petroleum Corporation, NNPC has summoned the major marketers, independent marketers and other stakeholders to a crucial meeting, the outcome which is yet to be made public at the time of writing this report.
Informed sources in the sector, who pleaded anonymity, said stakeholders were generally opposed to further increase in price in order not to cause instability in the sector, and by extension the nation’s economy, meaning that the NNPC would continue to bear the burden of subsidy as the government did not make provision for it in the 2021 budget.
However, speaking virtually on, ‘After Deregulation, What Next?’ in Lagos, February 11, 2021, Mr. Adetunji Oyebanji, Chairman, MOMAN, had said: “With a fully deregulated downstream industry, the natural fear and anticipation of Nigerians is the increase in the price of transportation, food items, and the attendant economic hardships.