Against the backdrop of growing volatility in Nigeria’s FX market, the Independent Petroleum Marketers Association of Nigeria (IPMAN) has foreseen a substantial rise in pump prices, projecting a potential escalation to N1,200 per liter for petrol in the Nigerian market.
Chief Ukadike Chinedu, the National Public Relations Officer of IPMAN, shed light on the mounting subsidy on petrol, asserting that in a free market scenario, the cost of the commodity could easily reach N1,200 per liter.
Ukadike backed this forecast by drawing comparisons with international petrol prices, specifically in the United States. He highlighted that premium petrol retails at $2.99, while super petrol is priced between $3.10 to $3.15 per gallon in the U.S. market. Converting these figures using the prevalent exchange rate in Nigeria’s parallel market, the cost equates to over N3,000 per gallon.
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“To be pragmatic in this analysis let’s consider the cost of petrol today in the United States. For premium petrol, it is $2.99, while super petrol sells for $3.15 or $3.10 depending on the part of that country where you are making the purchase,” he told The Punch.
He said that historically, in a free market setup, petrol tends to be priced higher than diesel, which currently sells for over N1,000 per liter in Nigeria.
“So if you consider the cost of diesel, dollar and other international factors, the price of petrol in Nigeria should be around N1,200/litre, but the government is subsidizing it, which to an extent is understandable,” he stated.
Illustrating the quasi-subsidy model, Ukadike clarified that the government wasn’t totally eliminating the subsidy but rather opting for a partial removal, taking out approximately 50% of the subsidy.
The NNPCL disagrees
However, contradicting these projections, the Nigerian National Petroleum Company Limited (NNPC Ltd) through its chief corporate communications officer, Olufemi Soneye, rebuffed any immediate rise in petrol prices. Soneye’s statement cautioned against panic-buying and reassured the public that there were no immediate plans to escalate the cost of petrol.
Ukadike, however, remained hopeful, suggesting that the commencement of operations at the Port Harcourt and Dangote refineries could potentially lead to a reduction in the prices of refined petroleum products. He emphasized his belief that the functioning of these refineries would play a pivotal role in stabilizing prices and decreasing the nation’s reliance on imported products.
The conflicting projections between petroleum marketers and the NNPC have left consumers uncertain about potential fuel price hikes. While the NNPC seeks to allay fears, the projections from IPMAN representatives sow seeds of caution and uncertainty, leaving the public in a state of cautious anticipation regarding the future cost of petrol.