Cost of imported petrol has risen to 1,000 per litre

The cost of imported petrol has risen to over N1,000 per litre due to the deepening foreign exchange crisis in the country, At the black-market exchange rate of N1,500 per dollar, the landing cost of petrol, which encompasses the international price of the product, shipping, insurance, and other associated charges, has surged to N1,009 per litre from N720 per litre in October 2023.

This increase in the landing cost of petrol is attributed to the escalating FX crisis, prompting interventions in the market through subsidies, as many Nigerians are unable to afford the market price for petrol, according to a senior executive in the downstream sector.

Following trading activities on Monday, the naira depreciated by 4.19 percent against the dollar, with one dollar quoted at N1,534.39 compared to N1,469.97 on Friday at the Nigerian Autonomous Foreign Exchange Market, based on data from FMDQ. The parallel market also witnessed a 1.33 percent depreciation, with the dollar trading at N1,505 on Monday, as opposed to N1,485 on Friday.

Bismarck Rewane, CEO of the Financial Derivatives Company, indicated that subsidy has been reduced, leading to the current price of PMS, which would be much higher if the subsidy were removed entirely.

Aisha Mohammed, an energy analyst at the Lagos-based Centre for Development Studies, highlighted that the government has partially subsidized the petrol commodity for political, social, and economic reasons, following calls for a review to reduce petrol costs, considering additional charges such as Nigerian Ports Authority charges, vessel charges, Nigerian Maritime Administration and Safety Agency charge, and other distribution costs which are incurred in dollars.

Efforts to confirm if the federal government has reverted to petrol subsidy through Olufemi Soneye, the chief corporate communications officer at the Nigerian National Petroleum Company Limited (NNPC), were unsuccessful.

Since President Bola Tinubu’s declaration that subsidy on petrol was eliminated, there has been public debate on whether to continue subsidizing fuel, with the pump price of petrol surging to over N600/litre in the wake of the subsidy removal, calling into question the allocation and reinvestment of surplus funds realized from the elimination of subsidies, particularly at the state level.

Amidst the ongoing challenges, it has been observed that state governors have been converting surplus naira cash to dollars rather than utilizing the funds to enhance infrastructure and human capital in their respective states.