Jumping petrol landing cost at N205 may spark off crisis in downstream soon—Expert
Considering the skyrocketing landing cost of the Premium Motor Spirit (petrol) being imported into the country now at N205 per litre on the back of the recent increase in global oil prices, the federal government is now at crossroads on absorbing the pressure of jerking up pump price.
It would be recalled that for several months, the Nigerian National Petroleum Corporation (NNPC) has been the sole importer of the product based on the pullout of independent marketers due to forex crisis and banks inability to continue to raise letters of credit for them.
In an interview with an energy expert, Dr. Kola Kofoworola in Lagos, he said “I think the government is now walking a tight rope as landing cost continues to surge even though oil prices can be said to be salutary to the economy”.
“The issue is that whatever government earns in oil exports, it loses in importing fuel as far as it cannot raise pump price and also afford to battle product scarcity this time.
Part of the key reason why independent marketers pulled out included the unprofitability of importing at high landing cost and still selling at N145 the current pump price.
Business Hilights recalls that as of March 20, 2018, when the international benchmark price for oil (Brent) was around $66 per barrel, the expected open market price of petrol, according to data obtained from the Petroleum Products Pricing Regulatory Agency, was around N189 per litre. The agency has not released any data since then.
Besides on December 23, 2017, NNPC said the Federal Government had been resisting intense pressure to increase the pump price of petrol, noting that the landing cost of the commodity was N171.4 per litre as of December 22, 2017 when oil price was around $64 per barrel.
Observers say as the landing cost stands now, the federal government may be spending as huge as over N200bn daily for the over 50m litres of fuel consumed on a daily basis.