The Crude Oil Refiners Association of Nigeria (CORAN) has suggested that the Nigerian government peg the foreign exchange (FX) rate at ₦1,000 per dollar to lower petrol prices to below ₦600 per liter. This follows the recent petrol price hikes caused by global crude oil prices and the weak naira. CORAN’s spokesperson, Eche Idoko, argued that this FX intervention would allow locally refined petrol, including from Dangote Refinery, to drop significantly without the need for subsidies. He highlighted that government action on exchange rates could ensure affordable prices.
With petrol prices soaring between ₦950 and ₦1,100 per liter due to the international cost of crude oil and the weakened naira, the Nigerian National Petroleum Company Limited (NNPCL) recently increased petrol prices to ₦898 per liter at its outlets. Idoko emphasized that government intervention by pegging the exchange rate for crude oil transactions at a lower rate would lead to a considerable drop in fuel prices.
Idoko also clarified that such an FX pegging approach differs from subsidies, which involve direct government payments to lower prices. Instead, this proposal focuses on setting mechanisms that maintain affordable fuel prices without government spending on subsidies. He urged the federal government to adopt this strategy to control petrol costs, particularly after the Dangote Refinery kick-off.
This measure, Idoko explained, would ensure that the price of petrol reflects the realities of the crude oil market while also considering the challenges faced by the naira. He concluded by saying that this approach could keep the price of petrol well below ₦500 per liter, benefiting Nigerian consumers without relying on costly subsidies.
By intervening in the FX market, the government could stabilize petrol prices, making them more affordable for Nigerians as the country increasingly relies on locally refined petroleum products. This intervention is seen as a sustainable solution to address the economic pressures faced by the petroleum sector and its consumers.
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