Economists and the Organised Private Sector (OPS) have warned that the hike in the pump price of Premium Motor Spirit (PMS, otherwise known as fuel or petrol) to N1,300 per litre could fuel inflationary pressures, affecting goods and services, while companies scramble to adjust budgets and pricing strategies to cushion the impact on consumers.
As a fallout of the ongoing United States-Iran war, a litre of PMS rose to about N1,300 per litre in most filling stations nationwide on Monday after the Dangote Petroleum Refinery hiked its gantry price from N995 to N1,175 a litre, sparking fears of a fresh rise in inflation among members of the OPS.
Some filling stations also sold a litre for N1,250, N1,350 and N1,400 respectively.
The OPS warned that the surge in petrol prices could trigger higher transport and food prices. They urged the Federal Government to strengthen efforts to boost local refining capacity and look for ingenious ways to tackle the incessant surge in fuel prices.
This was even as the Nigeria Labour Congress (NLC) slammed Dangote refinery’s repeated petrol price hikes, while there were reports on Monday that the G7 nations were planning to wade into the crisis by probably releasing emergency oil reserves.
Dangote’s N1,175 per litre petrol price on Monday marked the third upward adjustment within a week. This was as the price of crude hit about $115 per barrel before crashing to $98 later in the evening.
The latest price revision comes hours after The PUNCH projected that petrol prices could rise for the third time within a week following the temporary suspension of petrol sales at the refinery on Sunday.
The refinery announced the price hike to marketers on Monday, raising the gantry price of PMS to N1,175 per litre from N995 per litre announced on Friday, representing an increase of N180, or about 18.1 per cent, within three days. It also jerked up the gantry price of diesel to N1,620.
A senior official of the refinery said that the revision had already been communicated to marketers and depot operators.
‘Yes, the gantry prices have been adjusted. PMS is now N1,175 per litre while Automotive Gas Oil (diesel) is N1,620 per litre,” the official said. “The market has been extremely volatile, and replacement costs have shifted significantly in recent days. These adjustments reflect prevailing market fundamentals and the cost environment we are currently operating in’, the source said.
On the industry pricing platform, petroleumprice.ng, the revised rates had already been updated across petroleum depot pricing systems, indicating a shift in the benchmark price used by downstream marketers.
In a swift response, filling stations wasted no time in adjusting their pump prices from around N1,060 to N1,250. The Dangote Refinery-backed MRS filling in Olowotedo led the charge, raising the petrol price to N1,250. The NIPCO filling station in the area sold petrol at N1,200 as of Monday afternoon.
In Abuja, several filling stations along Airport Road adjusted their pump prices following the latest petrol price increase. Shafa and AA Rano sold petrol at N1,092 per litre, while Shema dispensed the product at N1,100 per litre in the morning. Optima recorded the highest price on the corridor at N1,270 per litre, while Matrix sold petrol at N1,092 per litre.
In an update on its X handle, the Dangote Group defended the price increase. Managing Director/CEO of the Dangote Petroleum Refinery, David Bird, said that the refinery would continue to meet Nigeria’s fuel demand despite global supply disruptions and market volatility, adding that domestic refining gives Nigeria supply security, ensuring the country avoids fuel shortages and queues even when global markets are disrupted.
According to Bird, even under the crude-for-Naira arrangement, Nigerian crude is purchased at international benchmark prices, meaning the refinery does not receive discounted crude. He said import-dependent countries are worst hit as the global oil crisis escalates.
‘Global oil markets are experiencing extreme volatility, with crude prices rising from the mid-$60 range to nearly $120 per barrel within a week. The refinery is fully exposed to international commodity markets, including crude oil prices, freight rates, insurance, and financing costs. Freight costs have surged dramatically, with tanker costs rising from about $800,000 to roughly $3.5m per shipment in the current market environment’, he explained.
The Independent Petroleum Marketers Association of Nigeria (IPMAN) said that the surge is temporary, as prices will normalise immediately the war ends. ‘The price of fuel would come down once Brent crude comes down immediately after the war’, IPMAN spokesman Chinedu Ukadike said.
According to Ukadike, Pinnacle Oil was selling petrol to marketers at N1,200. Some others, like Fynefield, sold it at N1,230, according to petroleumprice.com. ‘Filling stations are only adjusting the pump prices based on what we buy from the depots or Dangote refinery’, Ukadike said.
The spokesman of the Crude Oil Refineries Association of Nigeria, Eche Idoko, said that there is little the government or anybody could do to help the surge in fuel prices, saying Nigerians would have to endure it until other oil-producing countries think of an alternative.
He also noted that there would be relief the moment the Middle East crisis abates.
Members of the OPS warned that the increase in petrol prices could trigger higher transport and food prices, urging the Federal Government to strengthen efforts to boost local refining capacity.
In separate interviews with The PUNCH, business group leaders, including the Director-General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Chinyere Almona, said that the hike in pump prices had already begun to affect logistics costs across the economy.
‘We are already seeing increases in fuel pump prices, and this is likely to impact transport and food prices as it relates to food distribution logistics’, Almona said.
She added that the ongoing crisis in the Middle East could worsen the situation by disrupting global freight and pushing up the cost of imported goods. ‘The crisis in the Middle East is also affecting global freight logistics, which may also mean a higher cost of shipments and eventually transferred costs on imported goods’, Almona said.
The LCCI DG noted that the development could reverse recent progress recorded in moderating inflation, especially as the country approaches another election cycle.
‘We just celebrated the rate cut by the CBN (Central Bank of Nigeria), seeing a continuous declaration of our inflation rates in recent months. With electioneering activities around the corner and the unfortunate impact of the crises in the Middle East, the Nigerian economy may well be on its way to experiencing some inflationary pressures that must be carefully managed to avert recording negative economic indicators’, she noted.
Almona urged the government to prioritise investments that would strengthen domestic industrial capacity, particularly in refining crude oil locally.
‘We advise that we must ramp up local manufacturing and local refining capacity to beat these unforeseen global shocks that are mostly beyond our control. At this time, we urge the government to deepen its commitment to boosting local refining of our crude to meet local demand, away from importing refined petrol’, she stressed.
She added that Nigeria could benefit from rising crude oil prices in the international market if the government channels additional revenues into productive investments.
Also, the Director-General of the Nigeria Employers’ Consultative Association (NECA), Mr. Adewale Oyerinde, warned that sustained geopolitical tensions in the Middle East could worsen inflationary pressures in Nigeria through higher fuel costs.
He said rising energy prices typically affect transportation and logistics, which ultimately drive up the prices of goods and services.
‘Given the close link between energy costs, transportation, and the prices of goods, particularly agricultural produce, such developments could further exacerbate inflationary pressures, especially food inflation’, he said.
The NECA DG affirmed that higher fuel prices raise the cost of production and distribution for businesses, with the burden often passed on to consumers.
‘Higher energy costs increase the cost of logistics, production, and distribution across key sectors of the economy, including agriculture and manufacturing. As businesses contend with escalating operational expenses, these costs are often transferred to consumers through higher prices of goods and services, thereby deepening inflationary trends and weakening purchasing power’, Oyerinde said.
He, however, noted that the emergence of local refining capacity could help mitigate the impact of global oil price volatility if supported by the right policies.
‘While acknowledging the positive prospects presented by local refining, particularly the operations of the Dangote Refinery, the full benefits will depend on efficient supply chains, transparent pricing mechanisms, and supportive government policies’, Oyerinde said.
The President of the Association of Small Business Owners of Nigeria, Dr. Femi Egbesola, warned that the increase in petrol prices would likely raise the cost of transportation, manufacturing, and logistics.
‘Energy, particularly petrol and diesel, has always been one of the major drivers of inflation because it is used across virtually all sectors, from manufacturing to transportation and logistics. Whenever there is a hike in fuel price, naturally it will push up inflation, and now that we are having this particular hike, we should also expect that prices of food and commodities will naturally go up’, he said.
Egbesola added that the increase had now become significant enough to affect businesses and households. ‘You will remember that this hike has been going on for about a month or more now, coming up gradually. Initially, it looked insignificant, but now it is becoming very significant. The increase is becoming very significant’, he said.
He said the development would eventually lead to higher production and distribution costs, which would be reflected in consumer prices. ‘We should begin to expect that the cost of transportation will begin to go up; the cost of production and manufacturing will also begin to go up. And when that happens, it ends up with the cost of products and services also going up’, Egbesola said.
NLC argued that the spike in petrol prices has exposed weaknesses in Nigeria’s downstream petroleum sector, particularly regarding domestic refining capacity, saying the development casts doubt on claims that the Dangote refinery can fully meet Nigeria’s fuel demand.
The Assistant General Secretary of the NLC, Christopher Onyeka, said: ‘The crisis in the Middle East has brought into question many of Dangote’s claims about meeting the country’s demand for refined petroleum products’.
He noted that as international developments continue to influence petrol prices in Nigeria, it shows the country’s continued dependence on imported products, whether crude oil or refined fuel.
‘If we were truly refining domestically, global events should not have such a strong impact on local petrol prices. The reality is that Nigeria still relies on imported refined fuel’, he said.
Onyeka added that available information suggests domestic refining output remains far below national demand. He argued that rising global crude prices have pushed up the cost of imported refined products, increasing the burden on consumers.
‘The global crude price surge is passed on to countries like Nigeria that import refined fuel, leading to higher costs for consumers’, he stated.
He added that Nigerians are now paying more than N200 extra per litre due to the Middle East crisis, underlining the country’s exposure to global oil shocks. ‘This situation shows the urgent need for transparency and a deeper investigation into Nigeria’s downstream petroleum sector’, he stated.
