Upward Petrol Price Adjustment Raises Concerns
In line with analysts’ projections, petrol pump prices across the country are responding to the fuel importation by other marketers, different from the Nigerian National Petroleum Company Limited (NNPCL) swap deal, and other recent policy measures like the reintroduction of the 7.5% VAT on diesel, naira depreciation, and the implementation of some provision of Fiscal Policy Act 2022. Specifically, both NNPCL mega stations and other retail outlets have adjusted their pump prices, which were previously traded between N488 and N537 per litre after petrol subsidy, to a range of N568 to N627 per litre, depending on the location with Lagos recording the lowest pump price.
Analysts have argued that deregulating petrol prices and discontinuing the NNPCL swap deal in the absence of functioning domestic refineries would result in exorbitant pump prices. The current price increase underscores the argument that regulators should establish a pricing framework that sets limits for certain cost components to prevent market infractions. High petrol prices intensify inflationary pressures in the country and significantly raise energy and logistics costs for micro, small, and medium-scale enterprises (MSMEs), which are already grappling with the escalating costs associated with subsidy removal and foreign exchange depreciation. Additionally, it raises concerns among households regarding the affordability and availability of petrol, which has served as a viable substitute for household power generation. Analysts believe the high rate of price adjustment may also cripple petroleum products marketing business as motorists seek alternatives. A viable palliative, with large multiplier effects, to ease the burden of higher energy prices was recommended by Proshare research
