The cost of crude oil has surged, reaching about $94 per barrel. This increase and the depreciation of the naira against the US dollar may lead to a hike in the pump price of Premium Motor Spirit (PMS), commonly known as petrol.
Oil marketers revealed that the Federal Government has been quietly increasing the subsidy on petrol. The cost of crude oil and the dollar exchange rate account for over 80% of the price of PMS.
Brent crude, the global oil benchmark, rose to its highest figure in 2023. The naira has also weakened, further complicating the situation.
Despite the governmentโs insistence that the petrol subsidy has ended, marketers argue that a quasi-subsidy exists. They claim that if the government maintains the current petrol price, then a subsidy has effectively been reintroduced.
The Nigerian Association of Road Transport Owners (NARTO) also expressed concerns. They stated that the price cap on petrol has made it difficult for marketers to comply with increasing transportation costs.
Editorial
The looming fuel price hike is a matter of national concern. It affects the common man and has a ripple effect on various sectors of the economy.
The governmentโs stance on fuel subsidy is ambiguous at best. Is the government genuinely committed to deregulation, or is it merely paying lip service to the concept?
The fluctuating exchange rate of the naira against the dollar adds another layer of complexity. How can the government stabilize the currency to mitigate the impact on fuel prices?
The oil marketersโ claim of a quasi-subsidy raises questions about transparency. What steps should the government take to clarify its position on fuel subsidy?
Did You Know?
- Nigeria is the largest oil producer in Africa and the 11th largest in the world.
- The naira has been experiencing a steady decline, affecting various sectors of the economy.
- Premium Motor Spirit (PMS) is the technical name for petrol.
- Brent crude is a primary trading classification of sweet, light crude oil that serves as a significant benchmark price for purchases worldwide.
- The Nigerian National Petroleum Company Limited (NNPCL) is the state-owned oil corporation responsible for petroleum productsโ exploration, production, refining, distribution, and retail.
