Private oil depots in Nigeria have recently increased the price of Premium Motor Spirit (PMS), commonly known as petrol, to approximately ₦900 per litre. This marks a rise from the previous rates of under ₦850 per litre.
Key Factors Contributing to the Price Increase:
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Suspension of Naira Transactions by Dangote Refinery: The Dangote Petroleum Refinery temporarily halted the sale of petroleum products in naira to address mismatches between sales proceeds and crude oil purchase obligations, which are denominated in US dollars. This decision has impacted the supply chain and contributed to rising depot prices.
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Rising Crude Oil Prices: The cost of crude oil, a primary input for refining petrol, has increased from $70 to $75 per barrel. This uptick has led to higher production costs for refineries, including the Dangote Refinery, which in turn affects the depot prices of petrol.
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Increased Landing Costs: The Major Energies Association of Nigeria (MEMAN) reported that the landing cost of imported petrol rose by ₦88 per litre within a week, escalating from ₦797 to ₦885 per litre. This significant increase has further pressured depot owners to adjust their prices accordingly.
Implications for Consumers:
As private depots adjust their prices, independent retail outlets now sell petrol between ₦930 and ₦950 per litre. This development will likely lead to higher pump prices nationwide, affecting transportation costs and the broader economy.
Industry Response:
The Independent Petroleum Marketers Association of Nigeria (IPMAN) has expressed concerns over the price hikes and is urging the government to address the challenges hindering the execution of the naira-for-crude policy. They warn that unresolved issues may continue to drive petrol prices upward.
