Nigerians should expect to pay more for petrol soon, as the cost of crude oil and the naira’s value against the US dollar continue to rise.
Oil companies say that the cost of crude oil and the exchange rate of the dollar make up over 80% of the cost of petrol. Brent crude, the global benchmark for oil, reached $94/barrel on Sunday, the highest level of 2023.
Although the Nigerian government has said that fuel subsidies have ended, oil companies say that the government is still providing a “quasi-subsidy” by keeping the price of petrol at N617/litre.
The National Public Relations Officer of the Independent Petroleum Marketers Association of Nigeria, Chief Chinedu Ukadike, said that the cost of petrol should be higher than N617/litre, given the current price of crude oil and the exchange rate of the dollar.
Ukadike also said that Nigeria is experiencing “quasi-deregulation” of the petrol market. This means that the government is still intervening in the market, even though it has said that the market has been deregulated.
Ukadike called on the government to be more transparent about its fuel subsidy policy and to fully deregulate the petrol market.
In simpler terms, the price of petrol is going up in Nigeria because the cost of oil is going up and the naira is getting weaker against the dollar. The government is still trying to keep the price of petrol down, but it is likely to have to give up soon.