The Nigerian National Petroleum Company Limited (NNPCL) has raised the cost of Premium Motor Spirit (PMS), commonly known as petrol, to N617 per liter at fuel stations in Abuja. This increase comes just two months after President Bola Tinubu announced the removal of subsidies. A survey conducted by Vanguard revealed that in Lagos, petrol is being sold at prices ranging from N560 to around N617. The rise in fuel prices has caused dissatisfaction among Nigerians. Mr. Mike Osatuyi, the National Operations Controller of the Independent Marketers Association of Nigeria (IPMAN), provided the following reasons for the increase:
1. Increase in international crude oil prices: The benchmark price of Brent crude surpassed $80 per barrel for the first time since May 2023. This indicates a tightening supply and increasing demand, which is a contributing factor to the price hike. Saudi Arabia’s decision to reduce its oil output by 1 million barrels per day from June also influenced the situation.
2. Weakening exchange rate of the Naira: The exchange rate between the Naira and the US Dollar has risen, closing at N795.28/$1 at the official Investor and Exporters window. This increase is a result of the President’s directive to establish a unified exchange rate. At the unofficial I&E Window on July 17, 2023, it traded at N820/$1. Many companies are still awaiting imports, and the devaluation of the Naira means they need more Naira to acquire the required amount of dollars for importing.
The future possibility of price reductions depends on market forces. Increased competition and a subsequent rise in supply may eventually impact the domestic market, leading to a potential decrease in prices. Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), stated that current fuel pump prices in the country reflect the prevailing market price of the commodity.
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