Subsidy removal: Fuel price hike imminent as crude oil price inches towards $100 per barrel

In the last three months since President Bola Tinubu announced the withdrawal of petroleum subsidy, Nigerians are still trying to grapple with the over 400 per cent increment while they continue to wait for the promised palliatives from the government.

But the increase in the price of crude oil in the international market could further increase the price of petroleum at the filling stations despite the promise by President Tinubu that PMS price will not increase further.

The crude oil price in the international market has risen to $94 per barrel, the highest in the past 10 months. Market observers believe that the price will cross the $100 mark as demand increases during winter.

In the last three months since President Bola Tinubu announced the withdrawal of petroleum subsidy, Nigerians are still trying to grapple with the over 400 per cent increment while they continue to wait for the promised palliatives from the government.

But the increase in the price of crude oil in the international market could further increase the price of petroleum at the filling stations despite the promise by President Tinubu that PMS price will not increase further.

The crude oil price in the international market has risen to $94 per barrel, the highest in the past 10 months. Market observers believe that the price will cross the $100 mark as demand increases during winter.

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In the past, this increment would have generated excitement because it would mean more revenue for the Nigerian government; however, the increment in crude oil price means Nigerians may have to pay more for fuel.

Last month, President Tinubu had promised that price would be maintained by “addressing the inefficiencies within the midstream and downstream petroleum subsectors to maintain prices where they are without having to resort to a reversal of the administration’s policy in the petroleum industry.”

On Friday, the Group Chief Executive Officer of NNPC Limited, Mele Kyari had told some members of the House of Representatives that the NNPC Retail is moving to acquire significant market shares in the downstream sector so as to have control of the downstream market.

It would be recalled that NNPC Retail had in December acquired the retail outlets of Oando Limited.

The deal according to Kyari means that the NNPC Retail now has 30 per cent of the market and is able to regulate prices through the market share. He explained that other petroleum marketers would be forced to maintain prices because NNPC Retail won’t increase prices.

“Some weeks ago in Lagos, There was a small queue because one company increased their price by N7. As simple as this, everybody rushed to our filling stations and a queue developed. This is the security that the PIA guarantees.

“That Nigerians will have choices and they will not be exploited. We will be the market balancer. We will create stability in the market and Nigerians will not be exploited,” he said.

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However, Nigerians are still concerned about the increment despite the assurance by the President and the oil chief, particularly with the deregulation of the sector.

An economist, Dr Babatunde Adeniran says an increment may be inevitable considering the factor of demand and supply which is playing out in the international market.

“Yes. It is inevitable because they (marketers) adjust prices depending on the market realities, i.e, forces of demand and supply,” Adeniran says while responding to a question on the chance of a price hike.

Alternatives energy sources

President Tinubu had in a national broadcast in August promised to invest N100 billion in Compressed Natural Gas (CNG) buses to mitigate the impact of subsidy removal.

“The Nigerian Government has put aside N100 billion to purchase 3,000 twenty-seater buses powered by Compressed Natural Gas for deployment in all the states in the next nine months,” President Buhari said.

Adeniran urged the government to provide assistance to the masses by subsidizing the CNG kits.

“One of the means to mitigate the effect is to source for an alternative source of energy. One such alternative is the CNG. It remains the best source since it is relatively cheaper and cleaner.

“But to assist, the government can subsidize the CNG kit. If the government is able to achieve that, more people will embrace this.

“Nigeria has the capacity to meet the demand; we currently flare a lot of gas. Instead of flaring the gas, we can channel it into CNG which would be more productive,” he said.

Subsidy removal: Fuel price hike imminent as crude oil price inches towards $100 per barrel