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Rising Petrol Prices Cause Anxiety Among Nigerians as Ex-Depot Price Hits N490 per Litre
The recent increase in the ex-depot price of petrol in Nigeria has sparked palpable anxiety among the public. The price rose by 4.3% to N490 per litre, leading to petrol stations selling the product at inflated prices, surpassing N500 per litre in some areas. Despite the rise, findings reveal that the Nigerian National Petroleum Corporation (NNPC) Limited continues to sell petrol to major marketers at a lower rate of N446.57 per litre. This discrepancy, coupled with the absence of regulatory oversight at filling stations, has emboldened illegal operators and resulted in pump manipulation, product diversion, and exorbitant retail prices.
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- Price Disparity and Black Market:
While NNPC Limited sells petrol at N488 per litre in Lagos, major marketers have set their prices between N488 and N492 per litre, depending on the location. However, independent marketers purchasing petrol at N490 per litre are reselling it at N515 per litre on the thriving black market. This price mark-up has led to the closure of many independent marketers’ stations for regular customers while hawkers sell petrol at exorbitant prices ranging from N550 to N650 per litre in certain parts of Lagos.
- Regulatory Oversight Lapses:
The absence of officials from the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) at filling stations has created a lack of monitoring and enforcement against defaulters. This situation has allowed illegal operators to engage in sharp practices such as pump manipulation and product diversion. The lack of accountability has further exacerbated the prevailing challenges and contributed to the anxiety among the public.
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- Labour’s Alternative Solution:
Reacting to the price increase, the President of the Nigeria Labour Congress (NLC), Joe Ajaero, expressed concern over the petrol price hike, stating that it has made petrol a commodity for the wealthy. Ajaero emphasized the need for alternatives, such as Compressed Natural Gas (CNG), which can be derived from Nigeria’s abundant natural gas deposits. Labour’s proposal suggests using CNG as a cost-effective alternative to petrol, with the potential to reduce the price per liter to around N90. This alternative has gained support from stakeholders, including vehicle manufacturers.
- Deregulation and Market Forces:
According to the National President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), Elder Chinedu Okoronkwo, the petrol price is subject to foreign exchange fluctuations. Okoronkwo highlights the benefits of deregulation, which allows the price to be determined by international market forces. With the recent floating of the Naira and the removal of petrol subsidies, the price of petrol is expected to fluctuate constantly based on market dynamics. However, some experts argue that true deregulation should involve a level playing field for all market participants, ensuring fair competition and market efficiency.
- Government’s Role in Addressing Energy Crisis:
Consumer protection groups and experts stress the urgent need for the government to address the nation’s energy crisis and find lasting solutions. The high price of petrol has far-reaching implications, affecting other sectors that rely on petrol for power generation. Additionally, the proposed increase in electricity tariffs from July 1, 2023, based on an outdated exchange rate, compounds the financial burden on consumers. Recommendations include divesting the government’s stake in the power sector, promoting competition, addressing gas pricing, and investing in critical power grid infrastructure and network improvements.
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The recent rise in petrol prices in Nigeria has generated significant anxiety among the public. Disparities between ex-depot prices, retail prices, and the absence of regulatory oversight have led to inflated prices, a thriving black market, and unfair practices. Stakeholders emphasize the need for alternative solutions such as Compressed Natural Gas (CNG) and the importance of addressing the energy crisis through deregulation, market forces, and government intervention. Resolving these issues will not only alleviate the public’s concerns but also contribute to a more stable and efficient energy sector in Nigeria.
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This write-up simply shows that the new regime of market controlled pricing of fuel devoid of industry regulations is yet to be fully understood appreciated by the media.