By Precious Momoh
The cost of landing Premium petrol on the Nigerian shores has dropped by 20.34%, reaching N971.57 per litre over the past three months. This decline, as reported by the Major Energies Marketers Association, brings temporary relief from volatile global markets and transportation costs, yet retail petrol prices remain a concern for Nigerians, as they have surged by 71.79% since August 2024.
This shift in landing costs could have implications for consumer prices if market conditions stabilize, although the Nigerian populace continues to grapple with rising fuel expenses. Despite a reduction in landing costs, retail prices surged from N617 per litre in August to N1,060 per litre as of early November 2024. Independent stations have raised prices even higher, with some outlets charging up to N1,180 per litre, intensifying financial pressure on the public.
Landing Costs and Market Indicators
According to data provided by the Major Energies Marketers Association, oil marketers faced a significantly higher landing cost of N1,219 per litre in August 2024. At that time, petrol sold for N617 per litre, calculated based on a Brent crude oil price of $80.72 per barrel and an exchange rate of N1,611 per dollar. This situation highlighted the influence of crude oil benchmarks and exchange rates on petrol pricing in Nigeria’s deregulated market.
However, by November 2024, landing costs reduced to N971.57 per litre, influenced by a lower Brent crude benchmark of $75.57 per barrel and an exchange rate of N1,665.84 per dollar. This decrease in landing cost would traditionally suggest relief in retail pricing; however, a combination of factors has kept retail prices high. “Despite falling landing costs, fuel prices have surged significantly,” an industry report noted, pointing to deregulation and currency depreciation as key reasons for the disconnect between landing and pump prices.
The report from the Major Energies Marketers Association also highlighted that in September 2024, the landing cost had dropped further to N945.63 and even lower to N903.64 per litre in October 2024, reinforcing the expectation that global and local market dynamics might alleviate fuel costs. However, Nigerians have yet to see any significant drop at the pumps, reflecting the complexities of the downstream oil market and policy impact in Nigeria.
Public Backlash Amid High Retail Prices
The high retail cost of petrol, despite a reduced landing cost, has sparked public frustration and drawn criticism from several quarters. The Nigeria Labour Congress (NLC) recently voiced strong opposition, accusing fuel marketers of inflating prices unjustifiably. The NLC’s concerns were aired following its National Executive Council meeting, where it issued a communiqué accusing marketers of exploiting Nigerians by imposing “unbearable” petrol prices. “Nigerians are being exploited, and the result is increased suffering and hunger,” the communique stated.
With deregulation, fuel prices in Nigeria are no longer subsidized by the government, meaning they fluctuate based on international oil prices and exchange rates. The NLC urged regulatory bodies and the government to protect consumers, suggesting that the current retail price surpasses a justifiable range given the lower landing costs.
Deregulation, while necessary for industry growth, is now exacerbating financial burdens on consumers as it fully exposes Nigeria to the vagaries of the global oil market. “The reduction in landing cost should ideally reflect in retail prices,” said a petroleum industry analyst, “but the broader economic challenges in Nigeria are impacting the entire supply chain and ultimately the price consumers pay.”
Meanwhile, Nigerian households and businesses are adapting to the rising fuel costs, with transportation fares, goods, and services becoming increasingly expensive.
