BY OLAPEJU OLUBI
Nigerians woke up to a rude shock on Tuesday morning to see that various filling stations, especially those owned by the Nigerian National Petroleum Company Limited (NNPCL), have adjusted their pumps from N537/litre to N617/litre, showing an N80 hike. In Lagos, it was adjusted from N484 to N586 a litre, while in Kano, it went up to N620/litre.
Various oil marketers that the petrol price appreciation was a reaction to different market forces at play.
A source said the free fall of the naira was to blame since it tumbled severally after being floated by President Bola Ahmed Tinubu shortly after he assumed office.
“Marketers now have to cough out more naira to buy dollars at black market rate to sustain importation. Cost of operations have increased dramatically as a result of this. The old price of N537 is no longer sustainable. It’s pure business suicide”, a marketer who craved anonymity said.
Another marketer posited: “When President Bola Tinubu removed fuel subsidy on May 29 this year, the price of crude oil was about $74.75 per litre. But as of the end of trading on July 17, the price of crude oil had risen to $82.74 per litre. This implies that between May 29 and July 17, the price of crude oil in the international market has risen by $7.99 per litre or 10.68 per cent.
“What this means is that since Nigeria still relies on imported petrol to meet local demand and with the deregulation of the sector, the price of petrol will continue to reflect the international price of crude oil.
“Currently, the naira is trading at about N829 to a dollar due to persistent pressure from Nigerians and investors for foreign exchange to conduct international transactions.
“With the removal of petrol subsidy, oil marketers are now free to source their foreign exchange anywhere around the world to import petroleum products and then recover their costs without impediments. This would be expected to have an effect on the price of the product.
“The third factor is the high transportation costs. The distribution of petroleum products across the country is done through the movement of trucks. And this was why, during the period of fuel subsidy, the Federal Government came up with the Petroleum Equalization Fund through Decree 9 of 1975 (as amended by Decree Number 32 of 1989 now chapter 352 of the Laws of the Federation).
“The main objective of that Fund was to ensure price uniformity of petroleum products via the reimbursement of marketers for losses they incur in trucking products from depots to their filling stations anywhere in Nigeria.
“But with deregulation of the downstream petroleum sector following the removal of fuel subsidy, the Federal Government has now scrapped the payment of the fund. Since then, a lot of things have changed. What this means is that oil marketers will be solely responsible for how their products are transported from the depot to their respective petrol stations. The implication of this is that the cost of movement of this product would be transferred to consumers of petrol and this is expected to have an impact on the final price of petrol”, he explained.
Meanwhile, motorists who bought the petrol at the new price on Tuesday described the development as a death knell.
“We’re finished. Prices of food and other goods and transportation will further increase. This is hell. If not worse than hell. Tinubu is definitely asleep. How are we sure government agencies are not conniving with these marketers to prey on consumers in the name of deregulation?” Samuel Martins, a taxi driver, groaned.
Another motorist, Mrs. Olagoke Temitayo, lamented: “My husband gave me N6,000 this morning to buy above 10 litres, now it can’t buy up to that at N617/litre. There is no palliative whatsoever. Crime rates have swelled as people jostle to survive. The country has collapsed”.
A tricycle operator, Ibrahim, Yusufu most of his customers have resorted to trekking to reduce the transport fares.
“They will tell you N100 and that you should allow them to trek the rest of you can’t charge N100 for the ride. You have to agree or else no passengers for you. We’re in trouble in Nigeria”, he lamented
