Reports suggest that a rise in petrol prices is imminent as the Nigerian National Petroleum Company Limited (NNPCL) admits to financial difficulties. Recent statements from government officials have hinted that the current petrol price of N617 per litre may not be sustainable due to fluctuations in the Naira’s exchange rate against the dollar.
In recent weeks, long queues have returned at filling stations in Abuja, Lagos, and other states, with petrol being sold at prices as high as N1,000 per litre. This follows last year’s significant price increase after President Bola Ahmed Tinubu removed fuel subsidies.
On June 5, 2024, the Federal Government confirmed it was still paying fuel subsidies, contradicting previous denials. The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, revealed that the estimated expenditure on fuel subsidies for 2024 is N5.4 trillion, up by N1.8 trillion from 2023.
A potential petrol price increase would mark the fourth hike within 15 months, with industry sources suggesting the rise could happen sooner than expected. NNPCL has acknowledged media reports about its growing debt to petrol suppliers, which has now surpassed $6 billion, doubling since April 2024.
NNPCL’s Chief Corporate Communications Officer, Olufemi Soneye, stated that the financial strain threatens the sustainability of fuel supply but assured that the company remains committed to ensuring national energy security. The NNPCL informed the Federation Account Allocation Committee (FAAC) of an outstanding N4.56 trillion in subsidized petrol sales between August 2023 and June 2024, largely due to exchange rate differentials on petrol importation.
Experts believe that the government’s recent announcements may be part of a strategy to prepare the public for a petrol price increase, potentially reaching N950 to N1,000 per litre. The Minister of State for Petroleum, Heineken Lokpobiri, recently urged the NNPCL to stop selling fuel below landing costs to curb smuggling.
The Major Energy Marketers Association of Nigeria (MEMAN) revealed that the landing cost of petrol in July 2024 was N1,117 per litre, with diesel and aviation fuel landing costs also rising significantly.
Independent oil marketers argue that a price hike is inevitable in a deregulated market, given Nigeria’s declining crude oil production, which impacts its ability to import refined products. Industry leaders have stressed that selling petrol below cost is unsustainable and called for a shift to economic pricing to improve supply and reduce financial strain.
