As crude price hits almost $60/barrel, Federal Government has asked Nigerians to prepare for another hike in petrol price because the international price has a direct bearing on the cost of refined products.
Minister of State, Petroleum Resources, Timipre Sylva, gave the hint at the launch of Nigerian Upstream Cost Optimisation Programme (NUCOP).
According to him, “the higher the price of the crude oil at the international market, the higher the price of refined products like petrol, diesel and the rest”.
He said that the increase would reflect market realities, assuring the citizenry that mechanisms were in place to insulate the consumers from predatory practices of oil marketers.
In four months, the pump prices of petrol have risen from N121.50 to N123.50 per litre in June; N140.80 to N143.80 in July; N148 to N150 in August; N158 to N162 in September and N163 to N170 in November.
Sylva said there was no way Nigerian National Petroleum Resources (NNPC) could shoulder any form of subsidy because it was never provided for in the 2021 budget since the Federal Government had ditched the subsidy regime since last year.
Since November 13, 2020, when the local pump prices of petrol were last increased, the price of the international oil benchmark, Brent crude, has increased from $41.51 per barrel to $59.34 per barrel last weekend.
In June 2020, the Federal Government leveraged on the Covid-19-induced slump of global crude oil prices to totally yank off subsidy, to enable it free funds for other areas of the economy.
In December 2020, Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Mele Kolo Kyari, disclosed that from 2016 to 2019, the Federal Government had spent over N3 trillion subsidising the pump price of petroleum products, particularly petrol, insisting that the subsidy regime did not benefit the masses that the President is passionate about.
Oil marketers in December expected another upward adjustment of PMS prices to reflect the further rise in crude oil prices, which closed at $51.22 per barrel on December 31.
However, a N5 reduction in petrol price, effective December 14, was announced by the Federal Government. It did not go down well with them as they saw it as an interference in price fixing.
While crude oil price is a strong determinant of the final cost of petrol, Nigeria has continued to suffer low domestic refining capacity, forcing the government to import the products.
Some marketers are predicting that the pump price of petrol should be around N190/litre as against the current price of between N162-N165/litre. They have expressed concerns over the non-implementation of the full deregulation of the downstream petroleum sector as the pump prices of petrol have remained unchanged for over two months, despite the recent increase in global oil prices.
Sun
