Senior correspondent of punch newspaper FEMI ASU reported that the landing cost of Premium Motor Spirit (PMS) imported into Nigeria increased by more than 60% between December 2020 and mid-June 2021 despite the fact that the product’s pump price remained unchanged. The landing cost of petrol increased from N143.60 per litre in December to N231.98 per litre on June 16 this year, owing to a rally in global oil prices and a depreciation of the naira against the dollar.
The Petroleum Products Pricing Regulatory Agency released a pricing template in March 2021, indicating the guiding prices for the month. The template which showed that petrol pump prices were expected to range between N209.61 and N212.61 per litre sparked widespread public outrage and was later removed from the agency’s website. The landing cost of petrol was N189.61 per litre, according to the template, which was based on an average oil price of $62.22 per barrel in February and an exchange rate of N403.80 to a dollar.
The Central Bank of Nigeria devalued the naira last month when it adopted the Nigeria Autonomous Foreign Exchange Rate Fixing (NAFEX) exchange rate of N410.25 per dollar as its official exchange rate, just days after it removed the N379/$ rate from its website.
Crude oil which accounts for a significant portion of the final cost of petroleum products, has continued to rise in recent months with Brent the international oil benchmark closing at a record high of $76.18 per barrel last Friday and up from $73.88 per litre on June 16.
Mele Kyari, Group Managing Director of Nigerian National Petroleum Corporation stated on March 25 that with the current market situation the actual price of PMS could have ranged between N211 and N234 per litre. He stated that the Federal Government was subsidizing petrol with N100bn to N120bn per month (N3.3bn-N4bn daily) because it was sold for N162 per litre.
PUNCH estimated in an April 20, 2021 report that the petrol subsidy would consume N500 billion in the first five months of this year because the Federal Government decided to keep the pump price of petrol unchanged during the period despite the increase.
The effect of this on the price of AGO/PMS/DPK is a huge impact as an impending increase in the price of petroleum products (AGO/PMS/DPK) appears to be unavoidable. In a recent interview with Channels TV, Dr. Kyari, the GMD of NNPC, stated that PMS should retail at more than N280 per litre. “There is no country in the world where AGO is sold less than PMS,” he said, but with the cost of landing cost increasing at over 60% we are at a crossroad.
Source: Punch News, RunbenAbatai, Narialand.
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