Petrol truck cost has risen from N7 million in May to N25 million right now. This is according to Akin Akinrinade, the Chairman of the Independent Petroleum Marketers Association of Nigeria in the Satellite Depot branch.
Punch reports that he recently highlighted how inflation caused by poorly handled foreign exchange rates has significantly increased the cost of petrol in the country.
He mentioned that the price of one truck of petrol jumped from N7 million in May to N25 million presently.
This dramatic increase in cost has made it challenging for marketers to conduct their business smoothly, particularly within the downstream oil sector, due to these elevated expenses. He said:
- “The forex has been badly managed, and this has impacted the landing cost of PMS (premium motor spirit) also known as petrol, and by extension the pump price. The cost of doing business has also gone up astronomically. A truck of petrol that was N7 million in May this year is now N25 million. Business is really unpredictable now. Bank lending rate is also very high, contributing to the high cost.”
Note that in October 2023, during the Energy Labour Summit hosted by the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) in Abuja, Mele Kyari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL) highlighted that foreign exchange challenges have hindered private companies (marketers) from importing petroleum products.
Kyari emphasized that due to the scarcity in accessing foreign currency, private companies have been unable to engage in the importation of petroleum products. He pointed out that as a result, the Nigerian National Petroleum Corporation Limited (NNPCL) has reverted to being the exclusive importer of petrol.
- He clarified, “We are presently the sole company responsible for importing petrol into the country. None of these private entities can carry out this task at the moment. Their ability to access foreign exchange is limited, unlike us, who generate foreign exchange, giving us the advantage of access to foreign currency.”
Meanwhile, way back in June 2023, just after Bola Ahmed Tinubu was sworn in as president, Kyari told Reuters during an interview that starting from June 2023, private companies would be allowed to begin importing fuel.
At that time, the NNPCL planned to stop crude oil swap contracts and shift towards cash payments for fuel imports, enabling these private companies to participate in fuel imports.
The decision aligned with President Bola Tinubu’s initiatives aimed at deregulating the fuel market and reducing the financial burden on the government. Kyari, during the announcement, mentioned that after removing the subsidy on petrol, the market would naturally balance itself.
This means that oil marketing companies could either import fuel or produce it locally.
Kyari explained that these companies could bring the fuel into the market, sell it, and recover their investment. Shortly after Kyari’s statement, the Nigerian Midstream and Downstream Petroleum Authority (NMDPRA) confirmed granting petrol import licenses to six private companies.
A ripple effect
Already, commercial transporters have increased their fares due to the high cost of petrol across the country, especially with Christmas Day less than 20 days away.
A Nairametrics review of road transportation fares between Abuja and Benin City as well as Abuja and Lagos place prices at between N20,000 to N27,000 depending on the transporting company in use.
Also, private car owners in Abuja are beginning to purchase more fuel-saving liquids sold at petrol stations, to cut down on their fuel usage, especially those who drive to work daily.
It is expected that costs will rise even further due to the high demand for interstate travel during the Christmas holidays.
Meanwhile, many Nigerians are not earning higher than they were when macroeconomic conditions were better.
