By Mohammed Suleiman, DUTSE
On Thursday, the Independent Petroleum Marketers Association of Nigeria (IPMAN) says the new pump price of a litre of Premium Motor Spirit, also known as petrol, can’t be less than N500.
Their pronouncement followed the adjustment of petrol prices at retail outlets by the Nigerian National Petrol Company (NNPC) Limited.
IPMAN Deputy President, Zarama Mustapha, stated this on Thursday on Channels Television’s Sunrise Daily programme.
He explained that the NNPC, the sole importer of petrol, fixes the price for oil marketers nationwide.
According to him, oil marketers will now lift petrol at over N460/litre at fuel depots, adding transportation cost and profit margin, making the new pump price go as high as over N500 per litre.
A litre of petrol is already being sold at over N500 across the country following the NNPC price adjustment and the presidential pronouncement on subsidy removal.
Fuel queues have since surged for the vital commodity, compounding the traffic situation in parts of the country, even as transportation costs skyrocketed to more than 100% increment.
On Thursday morning, the IPMAN executive said, “NNPC being the sole supplier is the determiner of how much we purchase. The deregulation is just taking effect. May be, with time, they will allow other players to also participate in the importation of the product to compete with NNPC Limited.
“I still believe the NNPC is still the government because it is owned by the government.”
For example, Dutse to Kano fares was increased from N1200 to N2,000, while Dutse to Bauchi is now N3000, as against the former N2,500, among others, a situation in which commuters complained bitterly and called for redress.
Commenting on the sudden increase in fuel price by more than 170% due to the subsidy removal, an Economist, Dr. Ahmed Adamu of the Department of Economics, Federal University Dutse, opines that “the economy will shrink in the short run as productivity reduces. There will be less demand for petrol, and overall spending will decrease. Businesses will lay off staff to cope with the increasing cost of doing business, and general welfare will reduce.
He added that “there will be new inventions as people start looking for alternatives; they will explore alternative transport systems or fuel or adjust their lifestyle. More business opportunities will emerge from this development. People will now begin to organise collaborative transportation means to share or reduce the cost of transportation per head.
“Demand will be efficient, and wastages and unnecessary trips will reduce. There will be fewer cars on the road and reduced carbon emissions. The NNPC Limited remittance to the government will increase because the cost of the subsidy is being removed. This enables the government to do more development projects and borrow less.
“Even though the approach by President Tinubu needed to be more systematic, it has minimised the chances of prolonged speculative buying by retailers in the event of scheduling the removal on a designated future date,” he said.
The subsidy removal has led to increases in the prices of commodities.
Also, retailers of petrol that bought their products at a subsidised price just before the announcement are selling them at higher market prices, causing consumer losses and higher profits to the suppliers.
For example, a retailer that bought a truck of 45 thousand litres at an ex-depot price of N179 per litre just before the announcement is now selling it at N540 per litre, making a surplus of more than N15 million per truck.
Consumer losses are still inevitable even if a future date of the removal is announced, as retailers will engage in even more speculative buying ahead of the date to hoard as many extensive inventories as possible, wait for the removal date, and make abnormal profits.
It could be recalled that President Bola Tinubu, during his inaugural speech on May 29 at Eagle Square in Abuja, announced the removal of subsidy payment on petrol. The President said that the immediate past administration of Muhammadu Buhari did not make provisions for subsidy in the 2023 budget beyond June.
Many Nigerians had expected that the new price regime would come into effect by July 1, but almost immediately after the presidential pronouncement, queues resurfaced at filling stations across the country even as retail outlets hoarded the product and increased prices.
On Wednesday, the NNPC officially adjusted the pump price of the commodity, stating that the price will continue to fluctuate in line with market realities and dynamics.