Petrol landing cost climbs to ₦186 as oil hits $64

Landing cost of imported Premium Motor Spirit (PMS) popularly known as petrol has risen to N186.33 per litre.

The sharp increase is occasioned by the rising price of crude oil at the international market, currently at $64 per barrel.

Already, the Federal Government has hinted of possible increase in the pump price of petrol at the filling stations saying there is no provision for fuel subsidy in the budget,

But the labour has kicked against any fresh increase in petrol price, which they note that Nigerians cannot absorb in view of the biting economic crunch.

The Minister of Labour and Employment said a decision on the petrol price would be taken a meeting between the FG and state governors on Thursday.

The landing cost of petrol rose to N180 per litre on February 5 from N158 .53 per litre on January 7.

Crude oil price accounts for a large chunk of the final cost of petrol, and the deregulation of petrol price by the Federal Government last year means that the pump price of the product will reflect changes in the international oil market.

The pricing template of the Petroleum Products Pricing Regulatory Agency showed that the landing cost of petrol rose to N186.33 per litre on February 16.

The latest rise also indicates that the pump price of the product would be N209.33 per litre.

The Nigerian National Petroleum Corporation, which has been the sole importer of petrol into the country in recent years, is still being relied upon by marketers for the supply of the product despite the deregulation of the downstream petroleum sector.

Oil marketers said recently that they were ready to resume importation of petrol if the foreign exchange was made available to them at a competitive rate.

“The discussion we should be having today is how best to maximise the benefits of the removal of price controls and subsidies while minimising the adverse effects of this action on our citizens,” Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, said at a virtual press briefing.

The international oil benchmark, Brent crude, closed at $ 63.96 per barrel on February 16, up from $59.34 per barrel on February 5.

Brent crude, against which Nigeria’s oil is priced, rose by to $64.58 per barrel as of 6.08pm Nigerian time on Monday.

Other cost elements that make up the landing cost are freight (N10. 29), lightering expenses (N4.57), insurance cost (N0.25 ), Nigerian Ports Authority charge (N2.38), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61 ), storage charge (N2.58), and financing (N1.33).

The freight cost rose to $35.41 per MT (N10.29 per litre) last Wednesday from $30.04 per MT ( N8.74 per litre ) on February 5 .

The pump price is the sum of the landing cost, wholesale margin and the distribution margins. The wholesale margin is N4.03 while the distribution margins comprise transporters allowance ( N3 . 89 ), retailer ( N6 . 19 ), bridging fund ( N7 . 51 ), marine transport average (N 0 .15 ) , and admin charge (N1 . 23 ).

Apart from the changes in global crude oil prices , the exchange rate of naira to the dollar also affects the cost of imported petrol .

The cost of petrol would be higher if the 410/ $ 1 rate at which the naira closed on Monday at the Investors’ and Exporters’ Foreign Exchange Window was used. The naira closed at 480 / $ 1 at the parallel market.