The federal government wednesday raised the pump price of petrol to between N140.80 and N143.80 for July, the highest price increase in the last few months.
In March this year, the government said henceforth the pump price of petrol would be determined by market forces, stating that how much Nigerians would pay would 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 were positively correlated, the prices of petroleum products did not increase or reduce correspondingly with changes in crude oil price.
The Executive Secretary of the agency, Mr. Saidu Abdulkadir, in the circular issued yesterday to marketers on the new price, warned them against selling above the N140 – N143.80 price band set by the government.
The government had said with the removal of the existing cap on fuel prices, prices would be fully determined by market forces.
PPPRA 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.
“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 the latest adjustment of the price, 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,” PPPRA said.
It said 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’s not clear how it arrived at N140.80-N143.80, now that the price hovers around $38 and $40.
However, the agency urged all marketers to operate within the indicative prices as advised by PPPRA.