Why Fuel Is Selling At ₦617 Per Litre

Nigeria’s national oil company, the Nigerian National Petroleum Company Limited (NNPCL), has bumped up the pump price of petrol, commonly known as Premium Motor Spirit (PMS), to ₦617 per litre at outlets in Abuja.

This price hike, announced on Tuesday, comes in the wake of President Bola Tinubu’s removal of fuel subsidy just two months ago.

In Lagos, the commercial nerve centre of Nigeria, fuel prices range between ₦560 and ₦617 per litre, according to a recent survey conducted by Vanguard.

As the country grapples with this latest fuel price regime, Mr Mike Osatuyi, the National Operations Controller of the Independent Marketers Association of Nigeria (IPMAN), offered an explanation for the sudden spike.

Vanguard also revealed some reasons why petrol is selling for ₦617 per litre.

Increase In Crude Oil Prices In The International Market

Brent crude benchmark price had surpassed $80 per barrel for the first time since May 2023. This is a sign that supply is gradually tightening and demand is expanding.

This happened after Saudi Arabia agreed to cut its output to firm up oil prices, reflecting in 1 million barrels reduction per day from June.

Increase In The Dollar To Naira Exchange

Another factor that led to the increase in fuel price to be sold at ₦617 per litre was the hike in the exchange rate between the naira and the US dollar closed at ₦795.28/$1 at the official Investor and Exporters window.

This was established after the order by the President that there should be a unified exchange rate. On Monday, 17th July 2023, it traded ₦820/$1 at the unofficial I&E Window.

Petroleum Is Imported With Foreign Currency

The imports by many companies have not arrived in the country as they need more naira to put into dollars in order to import.

With the dwindling power of the naira, currently going for more than ₦800 to a dollar, they need more naira to put into dollars in order to import. Naira is becoming cheaper than before.

Will The Price Fall In The Future?

As debates go on whether the prices of fuel will drop from the current ₦617 per litre, it should be noted that this will depend on market forces.

It is expected that the price will drop based on the competition increased supply will eventually impact the domestic market later.

Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL) said that fuel pump prices in the country, are reflective of the current market price of the commodity.