Against the backdrop of the presumed full deregulation of Premium Motor Spirit (PMS), also known as petrol, which was believed to have led to the hike in the price of the product, last week, the price may go up again very soon, experts have warned.
The experts predicted their warning on further depreciation of the foreign exchange rate and an increase in the price of crude in the international market.
“And the increase in the price of crude is a very high possibility, given what is going on now in the Middle East, the geo-political tensions, the looming war between Iran and Israel”, Dr. Muda Yusuf, a renowned economist and Chief Executive Officer of Centre for the Promotion of Private Enterprise, CPPE, said.
On his part, another economist, Mr Teslim Shitta-Bey, Managing Director of Proshare, said: “The escalation of conflict in the Middle East could lead to rising global oil and gas prices, which could further raise the local retail price of petrol in Nigeria”.
Also speaking, Eze Onyekpere, Lead Director, Centre for Social Justice, CSJ, said the rising cost of PMS will increase the misery and poverty in the country
The Nigerian National Petroleum Company Limited, NNPCL, had, on Thursday, raised the pump price of PMS by 15 per cent across Nigeria.
The development confirmed Vanguard’s report that plans were underway to fully deregulate the sector and that subsidy would no longer apply.
However, the complete deregulation effect pushed the price of the product to N1,030 per litre, from N897 in Abuja, while the price rose to N998 per litre, from N855, in Lagos.
Checks by Vanguard indicated that the Dangote Petroleum Refinery price also increased by 8.8 per cent to N977 per litre, from N898 per litre.
The latest price increase made it the second time the petrol price had been hiked in the past month.
This showed that the pump price of petrol has risen by more than 411 per cent since President Bola Tinubu came into office in May 2023.
Specifically, from N195 per litre before the President assumed office on May 29, 2023, the price of the product was increased to N448 (Lagos) and N460 (Abuja) in May 31, 2024; N557 (Lagos) and N617 (Abuja) in September 2024; N610 (Lagos) and N897 (Abuja) in September 2024 before the latest increase to N998 (Lagos) and N1,030 (Abuja) in October 2024.
The latest increase, which came against expectations that the crude-for-Naira deal between the Federal Government and Dangote Refinery might lead to a reduction in the pump price beginning from October 1, 2024, has left many citizens, especially motorists, in anger.
Oil markets
Oil markets were on edge throughout last week, dealing with rumors of an imminent Israeli attack on Iranian oil infrastructure. Ultimately, Israel’s attack failed to materialize. Consequently, Brent futures settled just below the $79 per barrel mark. “Prospects of further PMS price hikes are high if some of the major variables driving prices go up”, Yusuf told Sunday Vanguard at the weekend.
“If we see a further depreciation in the exchange rates, that may cause a further hike in price. “If there is an increase in the price of crude in the international market, that may also cause a further hike in price.
“And the increase in price of crude is a very high possibility, given what is going on now in the Middle East, the geo-political tensions, the looming war between Iran and Israel. “So, those geo-political concerns are things that can lead to a further hike in crude oil price which will invariably lead to an increase in PMS price. “These are the risks that we face when we talk about complete deregulation of PMS price. The risk and the possibilities are very high at this time”.
Caution
Yusuf, who is the immediate past Director General of the Lagos Chamber of Commerce and Industry, LCCI, cautioned, “That is why we have to be extremely careful when we are pushing for a complete deregulation of PMS.
“The economy is highly sensitive, you know, to increases in PMS price. The citizens’ welfare is highly sensitive to movements in PMS prices.
“So, there’s a need to be extremely very careful because of the social consequences of further increases in PMS price”.
Dangote Refinery intervention
On the extent to which Dangote Refinery can ameliorate PMS price hikes, the economist said: “As to what Dangote can do, this is beyond Dangote. “Dangote Refinery is a business entity. It is the condition that we create either in terms of the foreign exchange environment or in terms of the crude oil sales to Dangote, that is what can make any difference in terms of price. “Dangote Refinery, on its own, cannot significantly determine the direction in which prices will go. “The best it can do is to try to be more efficient, try to be more competitive, and take advantage that the refining is taking place here.
“I think that is the best that can happen from Dangote. “If we want any significant impact on price through Dangote, then, the government policy must come into play.
Vanguard