The Petrol Price Gap: Why Nigerians are Paying More Despite Falling Costs

By Emmanuel Kwada

Recent reports indicate a significant decline in the landing costs of Premium Motor Spirit (PMS), commonly known as petrol, amidst rising accusations from the Nigeria Labour Congress (NLC) regarding price inflation by marketers. As of November 8, 2024, the estimated cost of petrol landing in Nigeria has dropped by 20.34%, falling to ₦971.57 per litre. This decrease is reflective of favorable global market fluctuations and improved supply chain conditions.

The data presented by the Major Energies Marketers Association highlights the following trends in landing costs over the past three months:

The consistent downward trajectory from August through October indicates a responsive global oil market. However, the slight uptick in November raises questions about ongoing pricing strategies.

The NLC has expressed its growing concern over what it perceives as manipulation within the petrol pricing system. “The NEC-in-session noted with increasing dismay the shenanigans around the appropriate pricing of petrol (PMS) in Nigeria. It observed that there may be a gang up against Nigerians by fat cats in the industry as the current price of the product is significantly higher than the real market price.”

Padding of costs and abnormal margins seems to be the order

They further emphasized, “Padding of costs and abnormal margins seems to be the order of the day considering the revelations from the ongoing controversy between Marketers and the Dangote group.”

Despite the decrease in landing costs, retail petrol prices have surged alarmingly. Prices at the pump have increased by ₦443, from ₦617 per litre in August to ₦1,060 per litre in November at Nigerian National Petroleum Company Limited retail stations, and up to ₦1,180 at independent marketers’ stations. This suggests a stark contrast between the falling cost of petrol at importation levels and the retail prices consumers are expected to pay.

The NLC has voiced serious concerns over this disparity, accusing petrol marketers of exploiting the Nigerian populace by inflating prices significantly above what they deem the actual market value. During a recent National Executive Council meeting, the union condemned practices that lead to price padding and steep profit margins, which they argue contribute to the economic burden faced by citizens.

File Photo: NLC Members protesting the fuel pump price hike

In response to these concerns, the NLC has called for urgent measures to address the perceived exploitation, criticizing current pricing mechanisms that they argue disconnect retail costs from actual market conditions.

The union’s demands include reassessing pricing frameworks to ensure fairness and accountability and advocating for the quick resumption of operations at domestic refineries in Port Harcourt, Warri, and Kaduna. The NLC contends that independently operated refineries would help dismantle monopolistic practices currently dominating the sector.

Nationwide strike beginning December 1, 2024, emphasizing the necessity for a reevaluation of petrol pricing

The NLC has announced a nationwide strike beginning December 1, 2024, emphasizing the necessity for a reevaluation of petrol pricing to alleviate the financial strain on Nigerians exacerbated by inflated market values. “NLC demands appropriate pricing of petrol and calls for the Public domestic refineries in PH, Warri and Kaduna to quickly come back on stream to break-up the monopolistic stranglehold the big players have on the industry,” the union stated in a communique released following its National Executive Council meeting on Sunday.

The current landscape of petrol pricing in Nigeria poses a significant challenge, characterized by a paradoxical situation where decreased landing costs have not translated to lower retail prices for consumers.

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The outcry from the NLC highlights the urgent need for regulatory intervention and transparency in the pricing mechanism. As the government grapples with rising economic challenges, ensuring equitable access to petrol at fair prices remains a critical focal point for both the labor union and the broader Nigerian populace. Immediate attention and action from relevant authorities will be crucial in addressing these discrepancies and restoring public confidence in the petrol pricing system.

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