Nigerians may soon face another hike in petrol prices, with experts warning that instability in the global oil market could exacerbate costs. The recent increase in the price of Premium Motor Spirit (PMS), commonly referred to as petrol, has raised concerns about a looming trend of continuous price surges as deregulation takes a firmer hold on the sector.
Last Thursday, the Nigerian National Petroleum Company Limited (NNPCL) announced a 15% increase in petrol prices, pushing the cost per litre to N1,030 in Abuja and N998 in Lagos. This raise is seen as part of a broader strategy to fully deregulate the sector, officially ending government subsidies. This latest increase represents a staggering 411% surge in prices since President Bola Tinubu took office in May 2023. Under his administration, prices have jumped from N195 per litre to today’s rates, with the latest adjustment marking the second increase within a month.
Economists attribute these rapid escalations to the depreciating foreign exchange rate coupled with rising crude oil prices in international markets. Dr. Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), warned that worsening geopolitical tensions in the Middle East, particularly the conflict between Iran and Israel, could further elevate crude prices. This warning was echoed by Teslim Shitta-Bey, Managing Director of Proshare, who noted that increased global oil prices would inevitably affect local retail prices in Nigeria.
Eze Onyekpere, Lead Director of the Centre for Social Justice (CSJ), expressed alarm over the socio-economic consequences of rising petrol prices, suggesting that the increase would amplify poverty levels in a nation that already grapples with widespread hardship. He criticized the NNPCL’s rationale for the price hike, calling it an “exercise founded on dubious and mischievous foundations.”
Despite expectations that a crude-for-Naira deal with Dangote Refinery could stabilize prices, recent developments have fueled frustrations among consumers, especially motorists. Experts caution against the reckless deregulation of the PMS market, underlining the sensitivity of the economy and citizens’ welfare to fuel price fluctuations. Yusuf stressed the need for careful policy formulation to mitigate the adverse effects of potential further price hikes.
As the oil market fluctuated last week, rumors regarding an Israeli strike on Iranian oil infrastructure heightened tensions, although such an attack did not materialize, keeping Brent futures just below $79 per barrel. Yusuf indicated that if key variables remain volatile, Nigeria might experience additional price increases.
Shitta-Bey added that rising energy costs have fed into inflationary pressures, with the National Bureau of Statistics reporting a headline inflation rate of 27.5% in September. He warned that while domestic inflation is strongly influenced by external factors, the local populace is bracing for a decline in real disposable incomes—potentially exacerbating their financial struggles.
Amid discussions about how to shield citizens from the impact of these price hikes, calls for a government-managed subsidy system for Dangote Refinery have emerged, promoting the idea that the refinery could operate more effectively under conditions that stabilize crude pricing and enhance foreign reserves.
Looking ahead, analysts predict a potential shift from stagflation to recession if petrol prices continue to rise unchecked. The situation is compounded by the government’s conflicting economic policies on energy prices and inflation management, raising questions about effective governance and long-term fiscal strategies.
With over 133 million Nigerians already affected by multidimensional poverty, the outlook appears grim as political and economic leaders chart a course through an increasingly challenging environment marked by instability and rising prices.
