Nigerians are now bracing up for fresh hardship as the increase in petrol and diesel prices threatens to trigger another wave of higher costs across the economy.
Specifically, Abuja and other northern
cities are set to face prices as rising crude oil prices and transportation
costs increase the cost of supplying petroleum products to inland markets.
This followed the decision of Dangote Petroleum
Refinery to raise its Premium Motor Spirit, PMS, also known as petrol, gantry
price by 6.7 per cent to N1,350 per litre from N1,265.
In a memo to customers, the refinery said: “Dear
valued customer, please find below the revised DPRP PMS gantry and coastal
price, which is effective September 12th, 2026.”
It also directed customers with existing loading
arrangements to return their Automated Truck Certificates, ATCs, for repricing.
It said: “You are advised to return all ATCs for
repricing and a new volume contract will be issued for immediate loading
resumption.”
The increase is expected to raise acquisition costs
for marketers sourcing petrol from the refinery and could trigger further
pump-price adjustments.
The latest Energy Bulletin by the Industry
Competency Centre, Lagos, showed that the seven-day average Brent crude price
stood at $98.74 per barrel, while Bonny Light averaged $104.65. The seven-day
average exchange rate was N1,323.12/$.
For detailed information on our editing services, please
see inside
The bulletin put the seven-day average domestic
petrol price at N1,308.33 per litre and diesel at N1,855.97 per litre.
With coastal ex-depot petrol prices currently
ranging from N1,265.50 to N1,285 per litre, inland markets are expected to
record higher prices because of additional trucking and distribution costs.
Industry estimates indicate that petrol could sell
for N1,400-N1,500 per litre in Abuja, with prices potentially exceeding N1,500
at some filling stations, depending on supply costs and marketers’ margins.
The impact could be greater in northern cities
farther from coastal supply centres. Petrol prices in Kano, Kaduna, Jos and
other inland markets could rise to between N1,450 and N1,600 per litre,
depending on availability, transportation costs and supply routes.
Diesel prices are also expected to remain elevated.
The bulletin showed Lagos diesel ex-depot prices ranging between N1,790 and
N2,100 per litre, suggesting that inland prices could reach N2,100-N2,400 per
litre or higher after transportation and other distribution costs.
The widening gap between coastal and inland prices
highlights the impact of logistics on Nigeria’s deregulated downstream
petroleum market.
While Lagos, Port Harcourt and Warri have relatively
close access to refineries, terminals and other supply centres, Abuja and
northern markets depend heavily on products transported over longer distances.
The pressure could intensify if crude oil remains
above $100 per barrel, the naira weakens or transportation costs rise.
Conversely, lower crude prices, a stronger naira and reduced logistics costs
could ease pressure on consumers.
Oil price, freight rate spikes challenge refineries
— Expert
Reacting in an interview with Sunday Vanguard,
Olatide Jeremiah, Chief Executive Officer, Petroleumprice.ng, said the increase
reflected developments in the international oil market.
He said: “Oil price and freight rate spikes are
universal challenges for refineries, except where the Federal Government
intervenes. Gantry and pump prices will ultimately be determined by the impact
of the Middle East crisis.
“The upward review of petrol prices to N1,350 per
litre by the Dangote Refinery is expected as oil prices approach $110 per
barrel.
“Pump prices could hit N1,500 per litre in major
cities across Nigeria if the crisis persists.”
High fuel prices mean hardship for Nigerians —
OGSPAN
Also speaking, Lawal Kamaldeen, Vice President, Oil
and Gas Service Providers Association of Nigeria, OGSPAN, said the latest
increase would further pressure households and businesses.
He said: “The ¦ 85 increase represents approximately
6.7 per cent, while the refinery’s cumulative increase since August 21 has
reached ¦ 185 per litre, representing about 15.9 per cent. The latest
adjustment comes at a particularly difficult time for Nigerian households and
businesses, which are already facing significant increases in the cost of
living and doing business.
“We recognise that Dangote Refinery is operating in
a market increasingly affected by international crude oil prices, product
replacement costs and geopolitical disruptions arising from the conflict
involving Iran and the United States. Recent developments in the international
oil market have created genuine cost pressures for refiners and petroleum
marketers.
“However, from the perspective of the domestic
economy, we are concerned about the likely consequences of another increase in
the cost of petrol.”
Kamaldeen said higher petrol prices would affect
transportation, distribution, agriculture, small businesses and other economic
activities.
“Petrol remains a major input for transportation,
distribution, agriculture, small businesses and general economic activity in
Nigeria. An increase in the wholesale price will inevitably create pressure
across the downstream petroleum value chain,” he said.
According to him, the impact could include higher
transportation and logistics costs, food and agricultural distribution costs,
prices of essential goods and services, operating costs for small and
medium-sized businesses, school transportation expenses and broader
inflationary pressure.
He said OGSPAN was proposing a targeted,
production-based support mechanism for locally refined petroleum products
rather than a return to broad, import-based fuel subsidy.
“Such an intervention could include increasing the
allocation of crude oil to qualified domestic refineries at competitive terms,
particularly during periods of exceptional international price volatility,” he
said.
He also called for a review of applicable taxes,
levies and government charges on locally refined petroleum products, where
necessary, as well as a transparent and time-bound domestic refining support
framework linked to actual production and supply.
Kamaldeen added that any government intervention
should be independently monitored and subject to clear performance benchmarks.
Also, Executive Director, Victoria
Ibezim-Ohaeri, Spaces for Change, warned that sustained increases in fuel
prices could deepen pressure on households and businesses.
She said: “For households, the most immediate
concern is likely to be higher transportation and food costs. Higher fuel and
logistics costs can raise the cost of moving people and goods, while households
and businesses that rely on petrol- or diesel-powered generators may face
additional energy expenses.
“These pressures could further reduce purchasing
power, particularly for low- and middle-income households. Nigeria’s headline
inflation rate currently stands at 15.43%, while food inflation is 20.31%,
according to the National Bureau of Statistics.
“Businesses across manufacturing, agriculture,
construction, retail and logistics are similarly exposed to higher energy,
transportation and input costs.
If the shock persists, firms may pass additional
costs on to consumers, absorb lower profit margins, postpone investment or
reduce employment. Consequently, a prolonged oil-price shock could constrain
the recovery of the non-oil economy even as the oil sector benefits from higher
crude prices.
“In the coming weeks, volatility is likely to remain
the central concern. Continued conflict and disruption to major shipping routes
could keep crude and refined petroleum prices elevated. Recent disruptions have
already reduced oil flows through the Strait of Hormuz and contributed to
higher shipping and fuel costs.”
She added: “Nigeria should therefore avoid treating
the current price increase simply as a revenue windfall. First, government
should preserve part of any additional oil revenue as fiscal and external
buffers rather than immediately expanding recurrent expenditure.
“Second, support should be targeted at households
and sectors most exposed to the shock. This could include temporary expansion
of well-targeted cash transfers, transport support and measures that reduce the
cost of moving food from farms to markets. Support for agricultural production,
storage, irrigation and affordable financing should also be prioritised to
reduce the risk that higher energy and transport costs translate into further
food-price increases.
“Third, government should accelerate measures that
reduce Nigeria’s exposure to petroleum-price volatility. Greater domestic gas
utilisation, more reliable electricity, renewable energy, efficient transport
systems and improved logistics can reduce the cost of energy across the wider
economy.”
Earlier, an economist and communications expert,
Clifford Egbomeade, said the immediate effect of higher crude prices would be a
cost shock across the economy.
“The immediate effect on Nigeria is a cost shock.
Higher crude prices will raise the cost of diesel, transport, freight and other
energy-intensive inputs, putting pressure on business margins and household
incomes,” he said.
0 Comments:
Post a Comment