Lagos — With Nigeria’s downstream sector already deregulated, indications are that petrol price could go up from the current N162 per litre to anything above N209 per litre starting from March.
Going by the current petrol pricing template of the Petroleum Products Pricing Regulatory Agency, PPPRA, the landing cost of petrol rose to N186.33 per litre on February 16, with the pump price of the product expected to be N209.33 per litre.
The calculation was made on the premise of international oil benchmark, Brent crude closing at $63.96 per barrel on February 16, up from $59.34 per barrel on February 5.
The rising price of crude oil pushed the cost of petrol quoted on Platts to $560.75 per metric tonne (N163.08 per litre, using N390/$1) on February 16 from $543.25 per metric tonne (N157.99 per litre) on February 5.
However, as at Monday, Brent already climbed to $65.67 per barrel at 1:PM Nigerian time.
If going by the continuous Increase in price of crude oil at the international market, nagging cry for full deregulation by oil marketers, and the fact that the federal government had declared an end to subsidy in March 2020, Nigerians could as well expect price of petrol to keep increasing.
Apart from rising crude oil price, other cost elements that make up the landing cost include freight (N10.29), lightering expenses (N4.57), insurance cost (N0.25), Nigerian Ports Authority charge (N2.38), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N1.33).
The freight cost increased to $35.41 per MT (N10.29 per litre) last Wednesday from $30.04 per MT (N8.74 per litre) on February 5.
The pump price is the sum of the landing cost, wholesale margin and the distribution margins. The wholesale margin is N4.03 while the distribution margins comprise transporters allowance (N3.89), retailer (N6.19), bridging fund (N7.51), marine transport average (N0.15), and admin charge (N1.23).
The exchange rate of naira to the dollar also affects the cost of imported petrol.
Although the federal government had said it had no intention of increasing petrol price this month, however, the Month of March is fast approaching with just few days, and if PPPRA decides to calculate the cost of petrol by the 410/$1 rate at which the naira closed on Monday at the Investors’ and Exporters’ Foreign Exchange Window, coupled with other costs, then, pump price of petrol could as well shoot up. The naira closed at 480/$1 at the parallel market.
Oil marketers have decried NNPC still retaining the sole importer role, and have indicated interest to start importing. What this spells is that; once marketers are given license to start importing, then, prices of petroleum products would also increase commensurate to a fully deregulated downstream sector.
Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, had during a recent virtual press briefing that it was time to start maximising the benefits of the removal of price controls and subsidies.
“While we do this, we must also discuss how to minimising the adverse effects of this action on our citizens”, he said.