By AYOOLA OLAOLUWA
The Federal Government of Nigeria is in a dilemma over the rising prices of crude oil in the international market and the attendant spike in the pump prices of petroleum products, especially Premium Motor Spirit (PMS), Business Hallmark can report.
Owing to the continued rise in the prices of Brent crude crude, which sustained its 6-week high of $86.81 at the close of trading on Friday, August 11, 2022, the price of gasoline climbed to its highest level of $989.75 per metric ton (MT) at the close of Friday, August 11 trading session.
A metric tonne of the same commodity, it would be recalled, had sold for $772 in July, compared to $694.8 it sold in June.
Meanwhile, by the time operational fee of about $50 is added to the cost, the average cost of PMS per metric tonne will climb to $1,025.75.
A quick conversion of the commodities from metric tonne to litres using the standard volume conversion rate showed that 1,341 litres of PMS will be gotten from a MT, with a litre going for $0.769 cents.
A further conversion of the $0.769 cents per litre of PMS to naira indicate that the product will be landing in Nigeria at the average rate of about N688.19.
Speaking recently on the disparity in the prices of petrol across the country, the Group Managing Director of the Nigerian National Petroleum Corporation Limited (NNPCL), Mele Kyari, had explained that it takes an average between N3 to N9 to distribute within Lagos, N15 in N21 neighbouring South West states and N45 to N50 to states in the South South, South East and the North.
Also, marketers are allowed a profit margin of between N15 to N30 to offset other operational costs like electricity and staff wages.
Expectedly, by the time the next fuel imports hit the Nigerian market in September, Lagosians will be paying about N650, while residents of Borno and other states far away states in the country will be paying between N690 and N720 for a litre of petrol.
A player in the petroleum sector also projected that Nigerians should expect further pump price adjustment in the next two weeks.
“As long as the exchange rate keeps going up the pump price will keep going up”, he declared.
He source also faulted the selling of forex to NNPCL at N720 per dollar, while marketers buy at N780 per dollar.
“There is no way we can compete with the NNPC as longer as the CBN continue to give it dollars at a subsidized rate of N720 per dollar, while we marketers buy at N780.
“Some of our members, who purchased dollars on Friday, August 11, got it at the rate of N850. Go and check Platt and see that crude price and refined products are sold in dollar. We buy in dollar and as such market fundamentals determine the price at which we marketers will sell.
“If the trend continued, our members may be forced to stop importing fuel. We can’t just continue with the unfair arrangement”, he lamented.
Other energy experts, who spoke on the development warned that Nigerians should expect to pay more for petrol as naira continue to lose ground against the dollar and the prices of crude oil continue to rise in the international market.
A check on the site of FMDQ showed that a dollar exchanged for $740 at the close of trading on August 11.
Owing to the removal of subsidy and devaluation of the naira, cost of transportation and prices of goods have soared beyond the means of many Nigerians.
The organised labour had also made two abortive efforts to go on strike but was restrained from shutting down the country by the Federal Government.
Despite the failed planned strike and protests, angry Nigerians have continued to groan in pains and hardship, while accusing the organised labour of abandoning them to their fate.
While the government have been able to stop the organised labour and civil societies from going on scheduled strikes and protests, the difficult living condition in the country is fueling tension among the people, with experts warning of potential social uprising.
“Nigerians are already stretched to the limit. Unleashing further hardship on them could result in a push back. So the government should be very careful in handling the matter.
“Using the harsh economic climate as an excuse, some elements have been whipping up sentiments against the government.
“This much was confirmed by the military high command on Friday when it’s spokesperson alleged that some Nigerians were instigating members of the armed forces to move against the just installed civilian administration”, a lecturer of behavioural psychology at the Olabisi Onabanjo University, Ogun State, Dr. Ropo Adejumo, noted.
Meanwhile, despite its hard stance on not going back on the withdrawal of fuel subsidy, Business Hallmark reliably gathered that the government is troubled by the hardship in the country and the ill-feelings it is breeding against the administration.
Troubled by the palpable anger growing in the land, some officials in the government close to the president, it was learnt, are pushing for a partial return to the fuel subsidy regime if the situation does not improve in the nearest future.
Though, they are in the minority, the proponents of a return to fuel subsidy seem to be getting the attention of the president, a source in the Presidency informed our correspondent.
“Yes, some people in government are pushing for a return to the ill-fated fuel subsidy regime. But the hawks, at least for now, are holding their ground, influencing the president not to yield to pressure.
“Their argument is that the prices of petrol should not be allowed to rise above their current rates. They (proponents) are advocating that any amount beyond the current rates should be born by the government until things improve.
“Though, the president is unwilling to reverse the withdrawal, he is bothered by the growing disenchantment with his government, even among some of his die-hard supporters who voted for him in the February 25, 2023 presidential election.
“Despite the pressure and insistence by the pro-subsidy advocates, the president has remained defiant and standing his ground. But surely, if the situation does not improve by October, something is going to give.
“The mood in the land will be so vile and combustible that the Tinubu administration would have no option than to intervene one way or the other to stem the trend.
“As things stand, there is uncertainty on the next line of action for the president and his men”, a source in government, who begged for anonymity disclosed.