Fuel price rises, deepens pressure on homes, businesses
***Transporters, commuters toolMRS raises pump price to N1,400/litre
***NNPC stations move to N1,375/litre lIndependent marketers raise prices to N1,400/litre
By Udeme Akpan & Mariam Eko
The surge in international crude oil prices above $100 per barrel is pushing up petrol prices across Nigeria, with major marketers raising pump prices and creating fresh pressure on transporters, commuters, households and businesses.
MRS filling stations have increased their petrol price to N1,400 per litre from N1,300, representing a N100, or 7.7 per cent, increase in Lagos and its environs.
Similarly, filling stations operated by NNPC Limited have raised their pump price to N1,375 per litre from N1,275, while some independent marketers have increased their prices to N1,400 from about N1,360 per litre.
The latest increases followed the rise in the gantry price of petrol by Dangote Petroleum Refinery to N1,350 per litre, reflecting the impact of higher crude oil prices and rising costs across the petroleum supply chain.
The development is expected to raise transportation costs and household expenses, while increasing operating costs for businesses that depend on fuel for logistics, power generation and other activities.
For transporters, the increase translates into higher daily operating expenses. Commercial buses, taxis, tricycles and other petrol-powered vehicles may require higher fares to maintain their margins.
Checks by Vanguard showed that this could place additional pressure on commuters who already spend a significant portion of their income on transportation.
The checks showed that workers, students, traders and other Nigerians travelling daily to offices, schools, markets and business centres are likely to feel the impact first.
The increase could also spread through the wider economy as higher transportation costs raise the cost of moving food, raw materials and finished products.
Distributors and retailers may pass the additional logistics expenses to consumers, potentially increasing the prices of food and other essential goods.
Households that rely on petrol-powered generators are also likely to face higher electricity-generation costs.
For small and medium-sized enterprises, the combination of higher fuel, transportation and power costs could further squeeze profit margins.
Manufacturers, retailers, logistics operators, restaurants and other businesses that rely on fuel for production, distribution or backup power may have to review their operating costs and, in some cases, increase prices.
The development could, therefore, create additional inflationary pressure, with higher energy and transportation costs feeding into the prices of goods and services.
In a telephone interview with Vanguard, the National President of Oil and Gas Services Providers Association of Nigeria, OGSPAN, Mazi Colman Obasi, said: “The immediate trigger is the sharp rise in international crude oil prices, which has increased the cost of refined petroleum products and altered the economics of domestic fuel supply.
“With Nigeria’s downstream market largely deregulated, pump prices are increasingly influenced by international crude prices, refined-product costs, freight, exchange rates and other supply-chain expenses.
“If crude prices remain above $100 per barrel or rise further, domestic petrol prices could come under additional pressure. For transporters, the immediate concern is the cost of keeping vehicles on the road. For commuters, it is higher fares.
“For households, it is increased spending on transportation, food and electricity and for businesses, it is rising logistics, production and energy costs.
‘’If the crude-price rally persists, the pressure could extend further across the Nigerian economy, deepening concerns over the cost of living and doing business.”
Earlier in her remarks, Victoria Ibezim-Ohaeri, Executive Director, Spaces for Change, had said: “For households, the most immediate concern is likely to be higher transportation and food costs.
‘’Higher fuel and logistics costs can raise the cost of moving people and goods, while households and businesses that rely on petrol- or diesel-powered generators may face additional energy expenses.
“These pressures could further reduce purchasing power, particularly for low- and middle-income households. Nigeria’s headline inflation rate currently stands at 15.43%, while food inflation is 20.31%, according to the National Bureau of Statistics, NBS.
“Businesses across manufacturing, agriculture, construction, retail and logistics are similarly exposed to higher energy, transportation and input costs. If the shock persists, firms may pass additional costs on to consumers, absorb lower profit margins, postpone investment or reduce employment.
‘’Consequently, a prolonged oil-price shock could constrain the recovery of the non-oil economy even as the oil sector benefits from higher crude prices.
“In the coming weeks, volatility is likely to remain the central concern. Continued conflict and disruption to major shipping routes could keep crude and refined petroleum prices elevated. Recent disruptions have already reduced oil flows through the Strait of Hormuz and contributed to higher shipping and fuel costs.”
Vanguard News
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