Petrol Price increase between N478 and N600/liter as subsidy goes

The Current petrol pricing template, the pump price of petrol will sell anywhere between N478 and N590 per litre, based on the effective dollar rate the Central Bank of Nigeria (CBN) settles upon following the directive by the new president to reform currency rates.

The Nigerian National Petroleum Company Limited (NNPC) met with oil marketers to agree on indicative pricing on Tuesday.

Mele Kyari, its group chief executive officer, met President Bola Tinubu at the Presidential Villa shortly after he resumed work. The results of these engagements have yet to be made public.

Using the CBN naira-dollar rate of N467/$1, the pump price of petrol could rise to N390 per litre if the government no longer pays subsidy. When the rate allowed for airlines to repatriate funds, which stand at N600/$1, is used.

At the black market rate of N750/$, the picture changes. The product cost rises to N503.91 per litre. Other costs including traders’ margin, freight, NPA port charges, NIMASA, financing costs, jetty storage, and wholesale margin bring the landing cost to N565.34.

When retailers margin, dealers margin and transport cost are added, it brings the price in Lagos to N590.34. The price could average around N600 when it is transported across Nigeria.

The major components that constitute petrol landing cost in Nigeria include product cost, traders and insurance margin, shipping, charges by government agencies, financing and banking charges and storage charges. These come to about N358.24 per litre as landing charges. Another N25 is added based on retailer margins (N15), dealer’s margin (N5) and Transport cost at (N5). This brings the total costs to N383.24.

“In light of the assurance given by the Nigerian National Petroleum Company Limited (NNPCL) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), we wish to reiterate that there is no cause for alarm,” they said.

“We strongly urge Nigerians to avoid panic buying or stockpiling of petrol. This behaviour not only creates artificial scarcity but also poses a significant safety hazard.”

According to the oil marketers, the NNPCL has assured Nigerians of adequate fuel supply and the NMDPRA is working closely with stakeholders to ensure a seamless transition.

“They are ensuring distribution channels remain uninterrupted, thereby making fuel readily available at all filling stations across the country,” it read. “The decision to phase out this fuel subsidy regime is not merely a fiscal reform; it is a significant stride toward social justice.”

“We understand the concerns regarding potential price increases. However, we expect marketers to maintain reasonable pricing, as NNPCL remains the sole supplier of the product currently,” the Joint statement read.

Refineries

Since Tinubu’s inaugural speech, labour unions have been kicking against subsidy removal. At a press briefing in Abuja on Tuesday, Festus Osifo and Nuhu Toro, president and general secretary of Trade Union Congress of Nigeria, said they expect the President to be wise with the issue at hand.

“We dare say that this is a very delicate issue that touches on the lives, if not very survival, of particularly the working people, hence ought to have been treated with the utmost caution, and should have been preceded by robust dialogue and consultation with, the representatives of the working people, including professionals, market people, students and the poor masses,” they said in a statement.

The labour leader said they were concerned that Tinubu was not specific in how the plan will work and that Nigerian workers and indeed masses must not be made to suffer the inefficiency of successive governments, adding that they are ready to dialogue with the President.

“We are also worried that in his speech President Tinubu failed to delve into or reveal his plans on how to tackle and address the issue of poor and unchecked deterioration in industrial relations, particularly in the education, health and judiciary sectors, often resulting in prolonged strike and Industrial actions and their attendant adverse effects on society and the economy.”

However, analysts say subsidy actually benefits the rich at the exclusion of the poor.

Fuel subsidy, a burden on poor Nigerians – Shettima

Shettima described Nigeria’s huge subsidy spending as a burden placed on poor Nigerians.

Shettima, speaking with State House Journalists on his first day in office at the Presidential Villa, said: “You and I benefit 90 percent from the fuel subsidy, while the poor, 40 percent of Nigerians, benefit very little. And we know the consequences of unveiling a masquerade.”

He said: “The truth of the matter is that it is either we get rid of subsidy or the fuel subsidy gets rid of the Nigerian nation.

“We will get fierce opposition from those benefitting from the oil subsidy scam. But where there is a will, there is a way. Be rest assured that our President is a man of strong will and conviction. In the fullness of time, you will appreciate his noble intentions for the nation. The issue of fuel subsidy will be frontally addressed. The earlier we do so, the better.”

Also speaking on the issue of multiple exchange rates, he said the Tinubu administration would collapse the multiple exchange into one.

He said: “So these are two big elephants in the room and as the days go by, we will be unveiling our agenda. He is going to unveil his agenda because as I have always said, there can never be two captains in a ship. He is the president and commander-in-chief of the armed forces.

“I’m the vice president. Your relevance is directly proportional to the level of your loyalty to the president. This is a gentleman that I have known for well over a decade; that I have interacted closely with. Be rest assured that we are going to work harmoniously as a team, as a family for the greater good of our nation.”