Nigeria Faces Potential Petrol Price Surge to N1,000 Per Liter as NNPCL Grapples with Financial Strain

By Osaiyekemwen Confidence

Nigerians may soon witness a sharp increase in petrol prices, with the Nigerian National Petroleum Company Limited (NNPCL) admitting to severe financial strain. Over the past two weeks, government officials have hinted that maintaining the current petrol price of N617 per liter might be unsustainable due to the volatile exchange rate of the Naira against the dollar.

Recent weeks have seen the return of long queues at filling stations operated by independent marketers in Abuja, Lagos, and other states. In these areas, petrol prices have soared to around N720 per liter, with some outlets charging as much as N1,000 per liter. These figures represent a significant jump from the official price, highlighting market instability and the likelihood of further increases.

The hike in petrol costs follows the removal of subsidies by President Bola Ahmed Tinubu last year, which has led to a substantial rise in prices. A draft report from the Accelerated Stabilisation and Advancement Plan (ASAP), presented by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, estimates that fuel subsidy expenditures for 2024 could reach N5.4 trillion. This amount is about N1.8 trillion more than what was spent in 2023, underscoring the rising costs of sustaining the current petrol price.

Should this price increase occur, it would mark the fourth hike in petrol prices in the past 15 months. Insights from oil marketers suggest that this increase could happen sooner than anticipated, driven by the need to align domestic petrol prices with international fuel costs.

Despite earlier assurances of sufficient fuel reserves and calls to avoid panic buying, the NNPCL has now admitted to a significant debt to petrol suppliers. Reports indicate that Nigeria’s debt to petroleum product suppliers has surpassed $6 billion, having doubled since early April this year. This growing financial burden has complicated NNPCL’s efforts to maintain the gap between regulated pump prices and international market rates.

Olufemi Soneye, NNPCL’s Chief Corporate Communications Officer, issued a statement yesterday acknowledging the company’s financial difficulties. He noted that these challenges have placed substantial pressure on NNPCL and threaten the sustainability of fuel supplies in the country.

As Nigeria braces for a potential petrol price hike, attention is focused on how NNPCL and the government will handle these financial constraints and mitigate the economic impact on the populace.