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.
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 Equalization 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.