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Anxiety as pump price of petrol races towards N1,405/litre

Published

4 months ago

September 3, 2024

Nigeria’s downstream petroleum industry may have gone into a frenzy, following clear indications that the Federal Government may no longer sustain the cost of under-recovery, otherwise known as subsidy, due to a the steady rise in petrol import bills..

Industry operators told Vanguard yesterday that it is now clear that pump price may be officially raised soon to enable the government, through the Nigerian National Petroleum Company Limited, NNPCL, to generate enough funds to settle its outstanding bills on products received on credit supply by several international dealers.

Consequently, they speculated that a compromise pump price of N1,000 per litre or more may be underway, though some of them quoted the landing cost of the product at about N1,200 per litre, excluding the cost of delivery to petrol stations.

Presently, NNPCL, according to the dealers, is no longer getting adequate supply to meet the nation’s needs, a situation which has worsened the product scarcity in the past one week while imposing excruciating pains on the transportation sector and the entire citizenry.

The shortage in supply, they further explained, was because some of the suppliers are no longer willing to deliver the product on credit. They also said that more of the products are now being smuggled out of the country.

The current transactional analysis obtained by Vanguard, yesterday, put the landing cost, including product cost, finance cost, freight, port charges, insurance, storage and the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDPRA at N1,205.52 per litre.

However, when the transportation cost, marketers’ margins and dues were added, the estimated official pump cost of the product rose to N1,405 per litre.

This indicates that at the proposed N1,000/ltr, under-recovery (subsidy) would still be significantly high, a situation which they said has put the government in a dilemma of choosing between full cost recovery (total elimination of subsidy) or a compromise position of splitting the cost between government and final consumers in a N1,000/ltr pump price.