FX crises drives new landing cost of petrol as marketers increase price

• Premium Motor Spirit (PMS), often known as petrol, now has a startling N978 per litre landing cost
• According to an investigation, the landing cost which includes shipping, insurance, others increased from N720/litre in October 2023
• Analysts said the increment is part of the consequences of the price subsidy removal at the inception of the administration

Legit.ng journalist Zainab Iwayemi has over 3-year-experience covering the Economy, Technology, and Capital Market.

Nigerians continue to grapple with petrol scarcity as the landing cost of Premium Motor Spirit (PMS), also known as petrol, has surged to a staggering N978 per litre.

The landing cost of petrol includes the product’s international price, shipping, insurance, and other charges. Photo Credit: Total
Source: UGC

At the black-market rate of N1,500 per dollar, findings showed the landing cost of petrol, which includes the product’s international price, shipping, insurance, and other charges, increased to N978 /litre from N720/litre in October 2023.

A senior executive in the downstream sector told BusinessDay,

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“The rising landing cost of petrol is a result of the rising FX crisis. There are interventions in the market through subsidies as most Nigerians cannot afford the market price for petrol.”

Naira dips

On Monday, the naira plunged to a three-month low of N1,530 per dollar on the black market, or parallel market, as end users' desire for the dollar increased.

In comparison to the N1,520 that was quoted on the black market on Friday, this indicates a 0.65 percent (N10) loss. On July 9, 2024, local currency was valued at N1,5723 per US dollar, based on information compiled by FMDQ.

According to Aisha Mohammed, an energy analyst at the Centre for Development Studies in Lagos, the government is partially subsidizing the commodity for social, political, and commercial reasons.

Mohammed said,

“All of us who were saying that they should remove the subsidy, we can see that they have partially removed it now, but look at the consequences. Economically, it will sound good, but socially and politically, it is very costly.”

Additional research revealed that the N978 landing cost does not include other distribution costs, vessel charges, Nigerian Maritime Administration and Safety Agency charges, or charges from the Nigerian Ports Authority.

A study to lower petrol prices is being called for by some experts, as some of these are charged in dollars.

The source said,

“We must resist the dollarization of the Nigerian economy; there are some fee collections in dollars that are also pushing up the landing cost of petrol.”

Petrol price increases

Black marketers took advantage of the long lines of drivers at the few gas stations on Tuesday by boosting their prices to between N1,000 and N1,100 per liter. In several retail establishments, particularly in Abuja, Nasarawa, and Niger, the pump price was raised to N900 per liter.

NNPC clarified that the lines were caused by recent thunderstorms and logistical issues that interfered with fuel-loading jetties' operations.

To address the issue and shorten the lines, the corporation did, however, clarify that it is collaborating with relevant parties.

In response, the president of the Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, verified that the NNPC had given marketers assurances that the problem was being resolved.

He clarified, though, that the lines might not go away in the coming days and that areas distant from large depots would likely see lengthier lines for fuel.

He stated,

“Once they start loading, it takes some days to clear the queues. And don’t forget that filling stations in Abuja get products from Lagos, Oghara, Warri, Port Harcourt or Calabar, and that takes more than three days turn-around time to accomplish.”

New price of petrol emerges

Legit.ng reported that a fresh wave of gasoline shortages has hit Lagos State and other regions of the nation, resulting in long lines at gas stations and sharp price increases for fuel, with some stores selling it for an unsettling N900 a litre.

ThisDay reported that the supply crisis also affected the Federal Capital Territory (FCT) and the states around it, resulting in mile-long lines and severe traffic in the capital.

On Monday, many gas stations in the Federal Capital Territory (FCT) were closed, and the handful that were open offered gasoline for as much as N900 per litre. The black market was also booming, with a 10-liter gasoline canister selling for as much as N12,000 at one point.

Source: Legit.ng