The landing cost of Premium Motor Spirit (petrol) imported into Nigeria has jumped to N216.31 per litre on the back of the recent increase in global oil prices and the depreciation of the naira against the dollar.
The Petroleum Products Pricing Regulatory Agency had in March released a pricing template that indicated the guiding prices for the month.
The template, which showed that petrol pump price was expected to range from N209.61 to N212.61 per litre, was greeted with widespread public outcry and was later deleted by the agency from its website.
The pump price of petrol has remained at between N162 and N165 per litre at many filling stations in Lagos since December.
The template, which was based on an average oil price of $62.22 per barrel for February and an exchange rate of N403.80 to a dollar, showed that the landing cost of petrol was N189.61 per litre.
The price of crude oil, which accounts for a large chunk of the final cost of petrol, closed at $65.98 per barrel last week. It stood at $66.41 per barrel as of 7:09pm Nigerian time on Tuesday.
The Group Managing Director, Nigerian National Petroleum Corporation, Mele Kyari, said on March 25 that with the current market situation, the actual price of petrol could have been anywhere between N211 and N234 per litre.
He said the Federal Government was subsidising petrol with about N100bn to N120bn monthly (N3.3bn-N4bn daily) as it was being sold for N162 per litre.
Based on the PPPRA template, the expected pump price of the product stood at N239.31 per litre as of April 16.
The expected retail price of N239.31 per litre and the current pump price of N162 per litre indicate a subsidy of N77.31 per litre.
With daily petrol consumption put at about 60 million litres by the NNPC and a subsidy of N77.31 per litre, daily subsidy amounts to N4.64bn.
The rising price of crude oil pushed the cost of petrol quoted on Platts to $642.25 per metric tonne (N193.39 per litre) on April 16 from an average cost of $561.96 (N169.22 per litre) used by PPPRA for March.
The freight cost increased to $29.98 per MT (N9.03 per litre) last Friday from an average of $21.63 per MT (N6.51 per litre) used by PPPRA for March.
Other cost elements that make up the landing cost include lightering expenses (N4.81), Nigerian Ports Authority charge (N2.49), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N2.17).
The pump price is the sum of the landing cost, wholesaler margin (N4.03), admin charge (N1.23), transporters allowance (N3.89), bridging fund (N7.51), marine transport average (N0.15), and retailer margin (N6.19).
The NNPC, which has been the sole importer of petrol into the country in recent years, is still being relied upon by marketers for the supply of the product despite the deregulation of the downstream petroleum sector.
Black market booms in Abuja as fuel queues surface
There were widespread petrol queues in Abuja and parts of Niger and Nasarawa states on Tuesday, as marketers of the product attributed the development to fears of possible price hike among, other concerns.
Also, hundreds of black marketers who sold the commodity in jerrycans resumed business in some of the affected locations on Monday.
Many fillings stations were shut to motorists on Monday morning, while the few ones that dispensed the commodity were flooded with motorists and other petrol seekers.
The only retail outlet of the Nigerian National Petroleum Corporation on the Kubwa-Zuba expressway that dispensed petrol on Monday morning was jam-packed with motorists.
Most other filling stations on that road and in various locations in Abuja and neighbouring states did sell petrol.
Attendants in some of the outlets told our correspondent that the threat by Petrol Tanker Drivers to embark on strike also contributed in triggering the scarcity in the affected areas.
The PTD had to suspend its proposed strike on Monday after the intervention of the Group Managing Director of NNPC, Mele kyari.
The NNPC had tweeted on Monday: “Following GMD #NNPC Mallam @MKKyari’s intervention in the National Association of Road Transport Owners/Petroleum Tanker Drivers impasse, PTD has just announced the suspension of its planned strike until closure of discussion between both parties.
“Also, the GMD announced that there would be no increase in the ex-depot price of Premium Motor Spirit in the month of May 2021.”
The corporation’s boss had also stated that there was enough petrol and urged motorists to refrain from panic buying.
Reacting to the development, the National Public Relations Officer, Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, explained that a number of factors had caused the scarcity.
He said, “The queues are here again because the problem associated with bringing in of products is still there. Our people in the North-West recently complained about the late payment of bridging claims by the Petroleum Equalisation Fund.”
He said the PEF had been defaulting in the prompt payment of claims to marketers, adding that the threat to embark of strike by the PTD before the intervention of NNPC also worsened the scarcity.
Ukadike said, “Also this issue on the pricing of petroleum products is another factor, because once is getting towards the end of the month, marketers will be waiting for the NNPC to know the pricing regime for the next month.”
He stated that the fluctuation in global crude oil prices had always put petrol marketers on the edge towards the end of every month, as there had often been speculations that the pump price of petrol would increase in the new month.
“The price is currently around N165/litre, but marketers are speculating that it could be around N175/litre next month despite the position of NNPC.
“And if this happens, before you restock you will have to pay more money for the product. So all these are factors. Towards the end of the month, transport owners and others often refrain from supplying products to independent marketers.”
The IPMAN official stated that what the NNPC boss said on Monday on the continued maintenance of current ex-depot price was basically to give reassurance to transport and depot owners to continue to supply.
NNPC working with stakeholders to end subsidy – Kyari
The Group Managing Director, Nigerian National Petroleum Corporation, Mele Kyari, on Tuesday disclosed that the Federal Government is currently engaging with stakeholders on the process that will lead to the removal of subsidy on Premium Motor Spirit (petrol) in a manner that will be beneficial to the ordinary man.
He said it was because the corporation knew the engagement could not be completed in May that informed the announcement that there would be no increase in fuel price.
Kyari spoke in an interview with State House correspondents after a meeting he had with the President, Major General Muhammadu Buhari (retd.), at the Presidential Villa, Abuja.
The PUNCH reported on Tuesday that with the Federal Government leaving the pump price of PMS unchanged in the first five months of this year despite the increase in global oil prices, subsidy on the product was estimated to gulp N500bn in the period.
In the Tuesday interview, Kyari said the current engagement would lead to choosing the right time for the subsidy regime to end.
The NNPC boss said, “Subsidy is a policy matter. I am sure you are aware of this.
“There are engagements going on within government to get the best framework for having a fully deregulated PMS market.
“As this is going on, we are engaging all parties and all stakeholders as government and to make sure that at the end of the day, there is an exit that is beneficial to the ordinary man.
“That is why we know we will not be able to complete that in the month of May and therefore we declared that there would be no increase in fuel price.
“I have no update in hand now; this is beyond me, but we are engaging to make sure that we have the right timeline.”
Answering a question on how increase in crude oil price increase impact on NNPC as regards subsidy, Kyari said, “You know it works both ways. Once prices increase, your revenue also increases.
“So, I don’t have any numbers around it, but I also know that your obligation to price of petroleum increases and your net revenue also increases.
“There is a balancing factor, I don’t think there is anything much to worry about.”
The NNPC boss also said the file queues currently being witnessed in Abuja and other parts of the country were nothing to worry about.
He attributed the development to an industrial action by tanker drivers and disclosed that the action had since been suspended for one week.
He added, “These queues will go away. It is because there was an industrial action by petroleum tanker drivers against their employers, the National Association of Road Transport Owners, around their compensation package and those issues were not resolved up till yesterday (Monday), until we intervened to ensure that there is an amicable settlement between the parties so that they will have peace and then normal loading operations will commence from the depots.
“As I speak to you at this moment, loading has commenced in all depots in the country, dispatches of trucks are ongoing in all the depots in the country and they have called off the strike for a period of one week to enable us to intervene and find a solution.
“So there is really nothing fundamental that is happening now.”
Kyari described his visit to Buhari as a regular update visit that is not for the public.
“It is usual for the Group Managing Director to continuously brief Mr President on updates in the industry and what is going on in the country around our business,” he explained.