By Abdulrahman Abdullahi
In the past few years, consecutive hikes in domestic fuel, kerosene and diesel prices always precede protests (usually online) as Nigerians constantly reject high fuel prices. The blame is usually pinned to the costs of importing fuel and other petroleum products into the country as seen below.
June 2000, the price of petroleum was N22 per litres.
1 January, 2002 fuel was increased from N22 to N26 per litre.
23 June, 2003 Federal Government increased the price from N26 to N40 per litre.
29 May, 2004 FG increased the price from N40 to N50 per litre.
August, 2004 Federal Government increased the price from N50 to N65 per litre.
27 May, 2007, after the protest of Nigerians against the increase in fuel price at N75 per litre. The FG reduced pump price to N65 per litre on June 2007.
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1 January, 2012 Federal Government announced fuel subsidy to increase the price of PMS to N141 per litre. Another protest was staged and the government later reduced the price to N97 per litre.
18 January, 2015 – due to the crash in the price of crude oil in the International Market, the former minister of petroleum, Mrs. Diezani Allison announce the reduction in the price of Premium Motor Spirit from N97 to N87.
May 2016, the price of petrol later increase to N145 per litre, the Minister of State for Petroleum, Mr. Ibe Kachikwu said the increase was to balance the different prices Nigerians pay to buy fuel as a result of fuel scarcity.
March 2020 – as a result in the crash of crude oil prices in the international market, pump price of Premium Motor Spirit (PMS) move from N145 to about N125 per liter.
After one month, for the second time in May 2020, the Petroleum Products Pricing Regulatory Agency (PPPRA) announced new pump price band to between N121.50 to N123.50 per litre for petrol.
In 2021, PMS remains N162-N165 per litre.
For selling Premium Motor Spirit (PMS) otherwise called petrol at N162 per litre instead of the current landing price of N234 for a litre, the Federal Government says it is now paying as much as N120 billion monthly to subsidize the estimated 60 million litres of petrol the country consumes daily.
What will be the reasons for the potential hike in fuel prices?
The two major factors responsible for a potential increase in fuel prices are the volatility in foreign exchange rates and the continued rise in international crude oil prices. During the pandemic, the Naira depreciated against the dollar as a result of dwindling foreign revenue and earnings. Technically, as we import refined petroleum products, the importers are subject to the exchange rate at the I&E window which is currently at $410 as at 12th March 2021.
