Naira, 3 other reasons filling stations are set to increase petrol prices above N700 in coming days

There are strong indications that filling stations across the country are set to increase the pump prices of Premium Motor Spirit, popularly called petrol, in the coming days, adding to the burden of already stretched Nigerians.

The proposed new pump prices are set to be adjusted from the current N580 and N617 per litre to around N680/litre and N720/litre.

If implemented, the new round of increases will be the third within 10 weeks since the announcement of the removal of the petrol subsidy.

Reasons for new pump prices

Legit.ng has provided a breakdown of why the prices are set to increase anytime soon.

No more subsidy

One primary reason for the changes in petrol prices is the absence of subsidies on petroleum products in Nigeria.

You may recall President Bola Tinubu, in his inaugural speech, announced the removal of the subsidy, opening the doors for market forces to determine pump prices.

This no-subsidy regime implies that Nigeria is now exposed to international oil prices.

Global crude oil prices

One primary reason petrol prices are increasing is global crude oil prices. You will recall that President Bola Tinubu, in his inaugural speech, announced that there would be no more extended fuel subsidy, opening the doors for market forces to determine pump prices.

Therefore, when crude oil prices increase, Nigerians must pay more.

Checks by Legit.ng show that Brent crude, the international oil price benchmark, increased from $76 per barrel in June 2023 to $86 per barrel as of Monday, August 14.

This means Nigerian oil marketers looking to restock have to pay more to import.

Vanguard reports that the landing cost of petrol has risen month-on-month, MoM, by 37.4% to N632.17 per litre in July 2023 from N460 per litre in June 2023.

Naira depreciation

Since the last pump price increase, Naira has depreciated against the US dollar by about 6.5% in the official market and 25% in the parallel market.

Legit.ng spoke to Chinedu Okoronkwo, the Independent Petroleum Marketers Association of Nigeria (IPMAN), and he confirmed the imminent price increase due to naira depreciation.

His words: "As long as the dollar keeps rising against the naira in the foreign exchange market, the price of fuel in the country will continue to increase."

If the exchange rate continues to hover between N910 to N950 per dollar in the parallel market and closer to N800 in the official market, the price of petrol will rise.

Scarcity of foreign exchange

Oil dealers seeking to import petrol are facing a need for more foreign exchange (forex) to facilitate the importation of petrol.

The forex shortage prevents dealers from securing the necessary forex for the commodity. Punch reports that oil marketers are now considering halting importation over the difficulty of getting forex.

If this happens, it will leave only NNPC as the sole importer and could lead to other marketers who manage to secure the product to raise prices.