In a new price adjustment, the Nigerian National Petroleum Company Limited (NNPCL) has raised the price of Premium Motor Spirit (PMS), commonly known as petrol, to N1,025 per litre in Lagos and neighboring areas. This hike, up from the previous rate of N980 per litre, marks the third increase within September and October 2024, sparking discussions on the broader economic impact. In Abuja, petrol prices have surged even higher, reaching N1,060 per litre.
The recent adjustment is part of Nigeria’s ongoing deregulation policy, which allows petrol prices to be determined by market forces rather than government subsidies. This move aligns with the government’s broader economic agenda but has led to significant price volatility, driven by both domestic factors and shifts in the international oil market.
However, this price hike has left many analysts puzzled, particularly as crude oil prices in the global market have recently fallen by around 8%, dropping from $78 to $72 per barrel. Ordinarily, such a decrease in crude oil costs might result in reduced petrol prices; instead, Nigerian consumers are experiencing the opposite trend. Some experts suggest that the continuous depreciation of the Naira, which currently stands at N1,664 to the dollar, is one of the primary reasons for the counterintuitive price increase. With the Naira’s weakened position, the cost of importing crude and refining it domestically remains high, further inflating prices at the pump.
The latest increase also underscores a disparity in the market. Following NNPCL’s announcement, many of its filling stations promptly adjusted their prices to the new rate, while numerous independent stations were either unaware of the change or opted to continue selling at the previous price. This inconsistency hints at challenges in price regulation and communication across fuel vendors, potentially creating confusion among consumers.
For Nigerians, the rising cost of petrol impacts daily expenses, as higher fuel prices often lead to an increase in the cost of goods and services. The deregulation approach continues to divide opinion, as proponents argue it will stabilize the economy in the long term by encouraging competition and reducing government spending on subsidies. However, for the average Nigerian, the immediate effects of deregulation, combined with a depreciating currency, present daily challenges, as they grapple with rising costs and reduced purchasing power in a challenging economic landscape.
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