Petrol Prices Surge 15%: “Major urban centers witness a substantial 15% increase in petrol prices, attributed to the acknowledgment of prevailing market forces.”

  • Post category:Business

“Petrol prices underwent a substantial 15% surge at the retail outlets of the national oil company in Abuja, climbing from N537 to N617 per litre on Tuesday. The sudden and significant price increase caused ripples of surprise across the country, prompting other fuel stations to promptly adjust their prices in response.

Many petrol stations typically benchmark their prices with those set by the Nigerian National Petroleum Company Limited (NNPCL). Consequently, when NNPCL adjusted its pump prices, other fuel stations followed suit, leading to a nationwide spike in fuel prices.

In Abuja, some outlets even raised their prices further, reaching N620 per litre, while in Lagos, the NNPCL retail outlet in Ikoyi sold petrol at N568/litre instead of the previous N490. By noon, only a few outlets in Abuja, including A.A Rano, were still selling below N600 per litre.

This situation has compelled Nigerians to face the realities of market forces in their economy. Market forces, governed by the principles of supply and demand in a less government-regulated market, dictate the fluctuations in the prices and availability of goods and services.

In Nigeria, these market forces are often influenced by various factors, such as oil marketers possibly colluding to control diesel prices while government agencies turn a blind eye. Additionally, the pressure from foreign exchange rates now contributes to the instability of petrol prices. According to Mike Osatuyi, the national operations controller of the Independent Marketers Association of Nigeria (IPMAN), the recent increase in petrol prices is a result of NNPCL cargoes arriving and being priced based on the current exchange rate between the dollar and naira.

This situation indicates a move towards market deregulation, as marketers now set their prices based on prevailing market realities. The government’s decision to issue licenses to several oil marketing companies for product importation has also broken the NNPCL’s monopoly, which was previously subsidized by the government.

Despite the emergence of competing oil marketers, the NNPCL’s superior distribution infrastructure is expected to maintain tight margins in the market. However, the imported products cannot be sold cheaply due to the prevailing market fundamentals, particularly foreign exchange rates, which impact the cost of imports.

The current demand for the dollar in the parallel market has driven the average exchange rate to N825 per dollar. This further contributes to the upsurge in petrol prices, with over 30% of the national consumption demand affected since the announcement of subsidy removal on May 29.”

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