In one of the highest price hikes since the government said it had fully deregulated the downstream sector, the federal government Wednesday raised the pump price of petrol to between N140.80 and N143.80 for the month of July. The government said with the removal of the existing cap on fuel prices, prices would be fully determined by market forces, although the Petroleum Products Pricing and Regulatory Agency (PPPRA), still modulates the petrol price range for every month.
PPPRA Executive Secretary, Saidu Abdulkadir, in a circular to marketers on the new price, warned them against selling above the N143.80 set by the government. In its latest adjustment of petrol prices, PPPRA said it arrived at the new band after factoring the operating costs of petrol 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.
In March, the government announced that thenceforth, the pump price of petrol will be determined by market forces, stating that the retail price at the pump will be determined by the international prices of crude oil. But a few days ago, the PPPRA noted that although the global crude oil price and petroleum products prices are positively correlated, the prices of petroleum products do not increase or reduce correspondingly with changes in the crude oil price.
Although the PPPRA set the price of N121.50 to N123.50 when the prices of crude oil averaged $35 last month, it is not clear how the agency arrived at N140.80-N143.80, now that the price of crude oil 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. 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 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, Timipre Sylva, had also recently said.