Despite a significant drop in the estimated cost of importing petrol, the price at Nigerian pumps has sharply increased, leaving citizens and labour organizations concerned about the growing economic strain.
The estimated cost of landing Premium Motor Spirit (PMS), commonly known as petrol, has dropped by 20.34 percent over the past three months, falling to N971.57 per litre from a previous higher value.
This reduction reflects some relief in the cost of importing and distributing the product, following fluctuations in global market prices and supply chain improvements.
The landing cost for petrol was N945.63 in September and N903.64 per litre in October, showing a steady decline despite the broader economic challenges.
However, this decline in the cost of importation has not translated into a decrease in retail prices. The price of petrol at the pump has surged by N443, or 71.79 percent, from N617 per litre on August 1, 2024, to N1,060 per litre by November 8, 2024. At some independent filling stations, the price has even hit N1,180 per litre.
This sharp increase, despite the falling landing cost, has drawn widespread criticism from both the public and advocacy groups.
The pricing discrepancy comes amid ongoing deregulation in Nigeria’s fuel sector, a process that aims to reduce government subsidies and allow the market to determine prices.
However, this shift has led to higher petrol costs, which many Nigerians find difficult to afford, especially as inflation continues to rise.
The landing cost of petrol in August was pegged at N1,219 per litre, based on a Brent crude oil price of $80.72 per barrel and an exchange rate of N1,611 to the dollar.
At that time, petrol sold for N617 per litre. By November, the Brent crude price had fallen to $75.57 per barrel, while the exchange rate had risen to N1,665.84 per dollar. Despite the lower landing cost of N971.57, the price at the pump has risen to N1,060.
Economic experts suggest that the reduced landing cost should ideally result in lower retail prices for consumers. However, they point out that rising inflation, exchange rate fluctuations, and the ongoing deregulation of the fuel market are contributing to the discrepancy.
The Nigeria Labour Congress (NLC) has voiced strong concerns over the price hike, accusing fuel marketers of inflating petrol prices.
In a statement issued after its National Executive Council meeting, the NLC claimed that the pump price was significantly higher than the actual market value, exploiting ordinary Nigerians.
The organization also lamented the worsening economic situation, with many citizens facing increased hardship and hunger due to the rising cost of living, which it attributes to government policies.
The NLC has called on both the government and fuel marketers to be held accountable for the soaring costs, which it argues are pushing many Nigerians into destitution.
The union’s call for a review of the fuel pricing policy reflects growing frustration with the impact of deregulation on the daily lives of ordinary citizens.
As Nigeria continues to grapple with economic challenges, the sharp contrast between falling landing costs and rising retail prices remains a contentious issue, with both consumers and advocacy groups demanding greater transparency and fairness in fuel pricing.
