A sharp jump in the pump price of petrol may be inevitable this year if the rise in global oil price persists and the federal government considers the option to allow oil marketers import and sell fuel at their own price, our reporter writes.
Nigerians may soon be paying a little more to buy petrol should the surge in global crude oil prices continue coupled with a plan by the federal government to allow private oil marketers import and sell fuel at their own price.
The Nigerian National Petroleum Corporation (NNPC) recently said that the landing cost of petrol has risen to N171 per litre, higher than the official government approved pump price of N145 per litre.
According to the corporation, the cost to import a litre of petrol has been affected in recent times by the rise in crude oil price at the international market.
Findings showed that the biggest single component of retail petrol price is the cost of crude; others are the cost of refining, transporting, and selling the refined product at retail outlets.
According to the US Energy Information Agency (EIA), as of March 2016, the cost of crude oil accounted for about 40 percent of what consumers paid at the pump, refining rates were around 24 per cent, taxes/charges made up 23 per cent while transport and retail constituted 13 per cent.
Brent, the global crude benchmark, surged to above $65 a barrel for the first time in more than two years on the first day of 2018 and analysts expect the price to increase further.
Oil prices have received the most support from production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia, amid enthusiasm that OPEC may extend the output deal again through 2018. Also, recent political tensions in Iran, the third-largest producer in the OPEC, have pushed oil prices higher.
The implication of the surge in crude price is the corresponding increase in petroleum products meaning that the approved pump price of N145 per litre in Nigeria may soon be unsustainable.
Many countries have started increasing prices of petroleum products since the start of 2018 due to the rise in global crude prices.
Saudi Arabia, one of the world’s top crude exporter, last week raised domestic gasoline (petrol) price, state news agency SPA reported.
The country’s Energy Ministry had initially indicated that it would announce in the first quarter of this year a rise in gasoline prices, but the rise came earlier than people had expected.
Saudi Arabia, said to be the country with the lowest fuel price in the world, will sell Octane 91 gasoline (petrol) for 1.37 riyals (N132/litre) a litre, up from 0.75 riyals (N72/lire), while Octane 95 will sell for 2.04 riyals (N196/litre), up from 0.90 riyals (N87/per litre).
In, Philippines, oil firms on the first day of 2018 announced they will hike the prices of its petroleum products due to the change in international oil prices.
“Effective 6 a.m. Tuesday, PTT Philippines’ gasoline products will be higher by P0.20 per liter (N1.44/litre),” Phillipines news website inquirer.net <http://inquirer.net> reported on January 1, quoting the state oil company PTT Philippines.
In the UAE, the Ministry of Energy has announced fuel prices for January 2018 in addition to a 5 per cent VAT.
The per litre gasoline prices for the first month of 2018, the ministry said will be: Super 98 at Dh2.24 (N219/litre) (up from Dh2.15 or N210/litre); Special 95 rose to Dh2.12 or N208/lire (from Dh2.04 or N200/lire).
In Europe, gasoline prices continued to burn a hole in Turkey citizens’ wallets, as a 13 kuruş (N12/litre) petrol price hike took effect in November, Turkish media hurriyetdailynews reported adding that prices went up yet again despite the fact that gasoline price per gallon in Turkey is one of the world’s highest on the basis of average daily wages.
With the price increases, one liter of gasoline would cost 5.65 liras ($1.45 or N542/litre) in the country’s three biggest cities: Istanbul, Ankara and İzmir.
Fuel price hike among African countries are common incidence in a continent that relies heavily on imported fuel. In South Africa, the country’s Automobile Association (AA) last November warned of a sharp jump in fuel price due to a weak rand and increase in global oil prices.
“Concerns over government’s fiscal discipline are likely to continue weighing heavily on the rand, and if these factors combine with continued oil strength, South Africans will face heavy fuel price hikes for the remainder of 2017 and into early 2018,” the association said.
In Nigeria, private importers have continued to clamour for a review in petrol price to reflect current realities. The marketers had months ago quit fuel importation partly due to increase in global crude oil price coupled with high cost to source the US dollar and a number of domestic logistics and distribution challenges.
Despite the landing cost of petrol being N171/litre government expects the pump price to be frozen at N145/litre meaning that some form of subsidy on the product at the rate of N26/litre is being shouldered by the NNPC.
However, there are strong indications that the NNPC may not be able to sustain such huge costs because of the financial implications.
Minister of State for petroleum, Dr. Ibe Kachikwu disclosed recently that government was considering allowing oil marketers import and sell fuel at their own price while NNPC mega stations would sell at N145/litre, as part of measures to end the recurring fuel scarcity.
If the plan sails through, motorists have no option but to brace up for petrol prices above N170/lire.
