FUEL PRICE HIKE: NNPC GMD says Petrol May Sell for N256 Per Litre

Mele Kyari

Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Mele Kyari, has said the price of petrol in the country should be N256 per litre and not the current selling price of N162 per litre.

This was made known by Mr. Kyari while speaking at a stakeholders meeting organised by the NNPC to stop fuel smuggling.

Commenting on the current PMS and subsidy payment, Mr Kyari noted that the petrol pump price should be N256 per litre given the current exchange rate.

“If we are to sell at the market today at the current exchange rate, we will be selling the product at about N256 to a litre. What we sell today is N162, so the difference is at a cost to the nation,’’ he said.

According to him, the country cannot sustain subsidy payment with the high volume of daily consumption, pointing out that the country coughs up N150 billion every month on subsidy.

The NNPC boss further explained, “As long as we don’t regulate volume until we are able to exit this current level, which I know so much work is going on, then we have to manage the volume that we are exposed to between this price of N162 and N256. The difference comes back to as much as N140 billion to N150 billion cost to the country monthly.

“As long as the volume goes up, that money continues to increase, and we have two sets of stress to face: the stress of supply and stress of foreign exchange for the NNPC. We may not see foreign exchange cheque taking place for importation.’’

Meanwhile, despite an upswing in the global price of crude oil and attendant blessings for oil-producing countries, the price of aviation fuel has spiked nationwide and much to the pains of airlines and travelers in Nigeria.

A fact-check showed that aviation fuel, also called Jet A-1, has lately sold for between N215 at airports in the South and N300/per litre in low traffic aerodromes in the Northern region of the country.

The price had risen in April 2021 to between N250 and N275 per litre, which was about a 200 per cent increase from 2016, when it was sold at N110. It rose to N200 in 2018, hovering around N160 and N170 in 2019.

An average 50 per cent surge in fuel cost, a critical component of airlines’ operation, has also forced airlines to increase airfares with an average Economy Class ticket on less than an hour flight selling for over N65,000.   

There are fears of fuel contamination in some quarters, which experts say, could threaten flight safety. Engr. Femi Adeniji of Tropical Arctic Logistics, a helicopter operator, said any jet fuel cheaper than N270 could have been contaminated.

Chairman and CEO of United Nigeria Airlines, Dr. Obiora Okonkwo, decried the development, which he said, has added to the cost of operation.

Okonkwo, whose airline debuted about four months ago, said: “We started operations at N160 per litre barely four months ago and when you move from that price to over N270 within two months, you should expect whatever we are experiencing now. Aviation fuel alone takes between 30 to 40 per cent of airlines’ costs. This is cause for grave concern to everyone.”

It was learnt that the extra burden on end-user airlines and travelers alike is not unconnected with the naira-to-dollar exchange rate, logistics hiccups of importing the product through chaotic Apapa ports, and more expensive distribution to nationwide airports by road.

Aside from the multiple taxes and charges on the product, the monopoly of marketers at less viable airports has also raised the price by some notches – making the product one of the most expensive in the West African region.

Indeed, aviation fuel is the oxygen of the airline business. Though an oil-producing nation and the sixth largest producer in the world, Nigeria’s perennial inability to refine the product locally has made jet fuel susceptible to dictates of the exchange rate, and therefore expensive, accounting for between 30 to 40 per cent of airlines’ operating cost.

Of dire consequence is the recent appreciation of crude oil price to $73.5 per barrel in the world market, and Naira’s free-fall to N500/$1 at home. At these rates, the landing cost of all imported products, including aviation fuel, could only reach for the rooftop.

But the dynamics of aviation fuel is more complicated. As a deregulated arm of the dollar-dependent aviation industry, jet fuel price is directly proportional to the price of crude oil. However, during the plunge of crude oil price late last year, aviation fuel prices did not fall accordingly.

Chief Operating Officer of CITA Petroleum, a major marketer in local aviation, Olasimbo Betiku, said Nigeria is a “situational economy” where pricing is heavily hinged on logistics cost elements.

Betiku said besides the dollar and liquidity constraints, transporting the product through poor infrastructure readily keeps the price comparatively high.

He explained that the product, like others, comes into the country through the Lagos ports, while intractable congestion at Apapa causes a delay in cargo clearance of between four and seven days or more. 

Stakeholders were unanimous that for each idle day, an importer pays between $10,000 to $25,000 extra charter cost per vessel. At more efficient ports, like Cotonou in Benin Republic where clearance takes between three to four hours, such add-on costs do not apply.

The risk of conveying the product in trucks remains a challenge in the sector. Since the early 90s, moving aviation fuel from the Mosimi pipeline to Lagos airport has been abandoned for more expensive road transport. While the cost of transportation within Lagos is about N3 per litre, it is about N15 per litre travelling up North as far as Maiduguri.

Petrol, electricity tariff hike: Buhari govt not interested in discussing solutions – Organised Labour

The Organised Labour on Monday said the Nigerian Government was not interested in honest dialogue over the hike in electricity tariff and fuel price.

The labour union said the government was not ready to find a lasting solution to the hike in the price of petrol and electricity tariff.

The body disclosed this in a statement jointly signed by the Nigerian Labour Congress, NLC, General Secretary, Emmanuel Ugboaja and Trade Union Congress, TUC, Secretary-General, Musa Lawal Ozigi.

In the statement titled: “Why we walked out,” the union said the government had shown bad faith in their agreement.

The statement reads partly: “At our meeting yesterday (Sunday night), we had prioritised as urgent this matter before delving into the issue of palliatives. However, the Honourable Minister of Labour, Dr Chris (Ngige) did not think it was important.

“All efforts to make him see reason failed. Given the tense situation and the government’s manifest of insensitivity, the organised labour had no option than to walk out.

“From the foregoing, it is clear that the government is not prepared for a sincere and honest dialogue on finding a lasting solution to the twin issues of petroleum price increase and electricity tariffs.”

NNPC Raises Petrol Depot Price, Marketers To Sell At ₦168 – ₦170 Per Litre

NNPC Raises Petrol Depot Price, Marketers To Sell At ₦168 – ₦170 Per Litre

The Petroleum Products Marketing Company, a subsidiary of the Nigerian National Petroleum Corporation, has increased the ex-depot price of Premium Motor Spirit, also known as petrol, to N155.17 per litre from N147.67 per litre.

The PPMC disclosed this in an internal memo with reference number PPMC/C/MK/003, dated November 11, 2020, and signed by Tijjani Ali.

The memo, a copy of which was seen by our correspondent, said the new ex-depot price would take effect from Friday.

The ex-depot price is the price at which the product is sold by the PPMC to marketers at the depots.

In its PMS price proposal for November, the PPMC put the landing cost of petrol at N128.89 per litre, up from N119.77 per litre in September/October.

It said the estimated minimum pump price of the product would increase to N161.36 per litre from N153.86 per litre.

The National Operation Controller, Independent Petroleum Marketers Association of Nigeria, Mr Mike Osatuyi, in a telephone interview with our correspondent, said the over N7 increase in ex-depot price would translate into an increase in pump prices.

He said, “The implication of the increase in the ex-depot price is that there is going to be an increase in the pump price. We are expecting the pump price to range from N168 to N170 per litre.

“Crude oil price is going up,” he said, noting that the Federal Government has fully deregulated petrol prices.

Following the deregulation of petrol prices in September, marketers across the country adjusted their pump prices to between N158 and N162 per litre to reflect the increase in global oil prices.

Petrol price band had also risen from N121.50–N123.50 per litre in June to N140.80-N143.80 in July and N148-N150 in August.

The Minister of State for Petroleum Resources, Timipre Sylva, said in September that the government had stepped back in fixing the price of petrol, adding that market forces and crude oil price would continue to determine the cost of the product.

UC,Fuel, electricity price hike: Buhari seeks truce with NLC, and Others

President Muhammadu Buhari yesterday set the machinery in motion to avert the strike being planned by organised private labour and the human rights community in reaction to the latest hike in fuel price and electricity tariff. He directed the Ministry of Labour and Employment to dialogue with the labour unions immediately.

The meeting is scheduled for today in Abuja. The Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC) are believed to have already gone far in mobilising workers for the strike aimed at forcing government to reverse last week’s increase of petrol price to N159 per litre and of electricity to over N60 per unit. but TUC insisted last night that government should first revert to the old prices first.

Flashback: Yesterday’s Protesters, Today’s Think Tanks-Our Pendulum Swinging differently

Following the recent increase of fuel price and electricity tariff, Nigerians have dug up old pictures of some prominent Nigerians protesting against former Nigeria President, Goodluck Jonathan’s government for increasing fuel price from 55 Naira to 65 Naira.

This is coming shortly after the President Buhari led-administration increased fuel price to 161 Naira and electricity tariff

It could be recalled that the likes of, Femi Falana, Femi Kuti, Mallam Nasiri El-Rufai, Nollywood Actor, Jide Kosoko, Dr Joe Okie Odumakin, Pat Utomi, Pastor Tunde Bakare, Professor Wole Soyinka, Some Lawyers and medical directors and thousands of Nigerians matched the street of Nigeria to protests against Jonathan for increasing fuel pump price.

However, ironically, those who protested against Jonathan are now silent towards this new developments and some Nigerians are beginning to ask if these same people are no longer in Nigeria or they are not seeing what is happening.

Meanwhile, some Nigerians have taken to the comment section of some of these individuals to call them out of what they describe as an act of ‘ cowardice’. Some are urging them to also do same now.

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