The federal government Wednesday raised the pump price of petrol to between N140.80 and N143.80 for July, in one of the highest price movement in the last few months.
In March this year, the government said that thenceforth the pump price of petrol will be determined by market forces, stating that how much Nigerians will get the product at a retail price will be largely determined by the international prices of crude oil.
But a few days ago, the Petroleum Products Pricing and Regulatory Agency (PPPRA), noted that although crude oil price and petroleum products prices are positively correlated, the prices of petroleum products do not increase or reduce correspondingly with changes in crude oil price.
The Executive Secretary of the agency, Mr Saidu Abdulkadir, in the circular to marketers on the new price warned them against selling above the N143.80 set by the government.
Wednesday’s increase remains the single highest price movement since the government said it had fully deregulated the downstream sector, although the PPPRA still ‘modulates’ or advises on a price band for every month.
The government said with the removal of the existing cap on fuel prices, prices would be fully determined by market forces.
The federal government had reduced the price of petrol , setting the new price band for the product at between N121.50 and N123.50 per litre in June, although all the filling stations continued to sell at the maximum price set by the PPPRA.
“Prices can go up and will go up. That’s why we are in the race to introduce CNG (Compressed Natural Gas) which is a cheaper fuel . If people decide to keep running on petrol, others will migrate to CNG,” the Minister of State, Petroleum, Mr Timipre Sylva, had also recently said.
In its latest adjustment of the price , the PPPRA stated that it arrived at the new band after taking into consideration the operating costs by marketers.
“Please recall the provision for the establishment of a monthly price band within which petroleum marketers are expected to sell petrol at the retail stations, based on the existing price regime.
“After a review of the prevailing market fundamentals in the month of June and considering marketers’ realistic operating costs, as much as practicable, we wish to advise a new petrol pump price band of N140.80 N143.80/litre, for the month of July, 2020.
The PPPRA said that the ex-depot for collection includes the statutory charges of bridging fund, marine transport average, national transport allowance (NTA) and the administrative charge.
Although the agency set a price of N121.50 to N123.50 when the prices of crude oil averaged $35 last month, it is not clear how it arrived at N140.80-N143.80, now that the price hovers around $38 and $40, a higher percentage compared to the price movement in the international market.
However, the agency urged all marketers to operate within the indicative prices as advised by PPPRA.