The pump prices of Premium Motor Spirit (PMS), commonly referred to as petrol, may soon exceed N1,000 per liter at filling stations across Nigeria. This is due to the escalating costs of the commodity at private depots, where prices have surged to between N920 and N950 per liter.
The situation has caused widespread concern among Nigerians, who are already grappling with the effects of economic hardship. On Monday, protesters took to the streets of Abuja, the nation’s capital, to voice their frustrations. They demanded the immediate removal of Mele Kyari, the Group Managing Director of the Nigerian National Petroleum Corporation Limited (NNPC), citing the persistent fuel scarcity and the government’s failure to address the issue.
According to sources within the oil industry, the NNPC has communicated to oil marketers the financial challenges it faces in importing petrol. This revelation has triggered alarm among dealers, who fear that the importation of petrol might be halted if the financial situation does not improve.
NNPC’s spokesperson, Olufemi Soneye, recently spoke about the company’s financial difficulties, stating that “NNPC Ltd faces financial strain due to PMS supply costs, impacting supply sustainability.” NNPC remains the sole importer of PMS into Nigeria and has been bearing the burden of subsidies on the product, which have cost trillions of naira.
Soneye emphasized that NNPC is committed to its role as “the supplier of last resort, ensuring national energy security,” as mandated by the Petroleum Industry Act. He assured Nigerians that the NNPC is “actively collaborating with relevant government agencies and other stakeholders to maintain a consistent supply of petroleum products nationwide.”
Despite these assurances, oil marketers have raised concerns about potential price hikes. They have been informed by NNPC officials that the current situation is unsustainable, and the company may not be able to continue subsidizing petrol. This has led to speculation that pump prices could rise even further in the coming weeks.
“Now, only NNPC Trading imports petrol, and they have come out frankly to inform marketers that they can no longer sustain it, which means they are subsidising the product all this while,” explained Ukadike Chinedu, the National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN). He added, “Of course, the cost of petrol at the pumps may rise further in the coming weeks because up till now we are not getting enough products. So, something urgent and drastic needs to be done to tackle this challenge now.”
The situation has been exacerbated by the pricing practices at private depots. Despite the Nigerian Upstream and Downstream Petroleum Regulatory Authority (NMDPRA) stipulating a specific price range for PMS, private depots are selling petrol at much higher prices, between N920 and N950 per litre. This discrepancy has fueled confusion and frustration among consumers and stakeholders alike.
Last week, George Ene-Ita, the spokesperson for NMDPRA, argued that the prices reported by their officials at the depots were lower than what was being charged by some independent marketers. “Our depot people see a different price because we ask them to publish the prices at the depots every day and it is not N850/liter. Our field agents at the depots give us a different figure,” he stated.
However, when informed that some filling stations operated by independent marketers in Lagos and other states were dispensing petrol for as high as N900 to N1,000 per liter, Ene-Ita asserted that such outlets would be penalized if caught. “If we get these outlets, all we do is to try and shut them down, because NNPC is the company that brings in the product and they tell us how much they sell as their ex-depot prices to off-takers. And we sit down together and work out the margins and there is no way it should be that high,” he added.
He further insisted that there is no justification for the high prices being charged by independent marketers. “Once we get these outlets, we are going to shut them down. NNPC tells us how much they sell and there is no way the pump prices should be that high. We don’t expect it to be higher than N650/liter,” he warned.
Despite these declarations, checks by our correspondents revealed that many filling stations, particularly those owned by independent marketers, were selling petrol at nearly N1,000 per liter. In Kaduna, some stations were even charging as high as N1,300 per liter, much to the dismay of consumers.
Hammed Fashola, the National Vice Chairman of IPMAN, criticized the NMDPRA’s stance, suggesting that the regulator was not being truthful about the situation. “I read in the news that the NMDPRA said no depot is selling at higher rates. I am not sure that should come from the NMDPRA. They are not being sincere. The NMDPRA knows what is happening because they have their officials in all the depots,” he argued.
He further explained that the high prices at filling stations were a direct result of the higher rates at which private depots sell to marketers. “The private depots sell to us at higher rates. If you add the cost of transportation and other expenses, the price will be higher. That’s what you see today in filling stations,” Fashola stated.
The situation is a reflection of the broader challenges facing the Nigerian economy, where rising costs, inflation, and dwindling foreign exchange reserves have compounded the country’s energy crisis. The potential increase in fuel prices is likely to have a cascading effect on the economy, driving up the cost of transportation and goods, thereby worsening the financial strain on the average Nigerian.
The ongoing crisis has sparked debate about the future of fuel subsidies in Nigeria. While some argue that the subsidies are necessary to cushion the impact of global oil price fluctuations on Nigerian consumers, others believe that the current subsidy regime is unsustainable and contributes to inefficiency and corruption in the oil sector.
As the government and stakeholders continue to grapple with these challenges, one thing is clear: urgent action is needed to stabilize the fuel supply and bring relief to millions of Nigerians who are struggling with high fuel prices and the resultant economic fallout. Without a swift and effective resolution, the country could face further social unrest and economic instability.
