Petrol price dilemma: Landing cost soars, subsidy rumors swirl

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The Major Energies Marketers Association of Nigeria (MEMAN) has thrown a fresh spotlight on the controversial issue of petrol pricing in Nigeria. MEMAN announced on Wednesday that the landing cost of petrol, also known as Premium Motor Spirit (PMS), has reached N1,117 per litre, a significant increase from previous estimates.

This disclosure reignites concerns about the sustainability of the current pump price regime, which ranges from N617 to N700 per litre. The high landing cost raises questions about the existence of a petrol subsidy, which the federal government has repeatedly denied.

• NNPC says no plan to increase PMS pump prices
• Nigerians brace for economic strain as petrol price soars
• NNPC confirms hike in petrol price across retails outlets 
• Pump price relief unlikely as marketers dispute N300/litre possibility
• FG suspends planned removal of fuel subsidy

Landing Cost vs. Pump Price Discrepancy:

The landing cost represents the total cost of importing petrol, including the product’s international price, shipping, insurance, and other charges. With the landing cost exceeding N1,117, a significant gap exists between this figure and the current pump price. This discrepancy suggests that the government might be intervening in the market to maintain the lower pump price.

Subsidy Speculations:

While the government has maintained that there is no petrol subsidy, MEMAN’s announcement fuels speculation that the government might be indirectly subsidizing the product. This subsidy could take various forms, such as absorbing some of the landing cost or manipulating the foreign exchange rate used by oil importers.

Economic Concerns:

The rising landing cost raises concerns about the potential impact on the Nigerian economy. If the government continues to subsidize petrol, it could put a strain on the national budget, diverting resources from other critical areas like infrastructure and healthcare. Additionally, the opaque nature of any potential subsidy could hinder transparency and accountability in public spending.

Market Uncertainty:

The situation creates uncertainty for both marketers and consumers. Marketers face the challenge of operating at a loss if they sell petrol at the current pump price given the high landing cost. Consumers, on the other hand, are concerned about potential price hikes if the government decides to remove or reduce any subsidy.

Tags: Petrol, MEMAN, NNPC, Nigeria, Economy, Subsidy, Fuel, Mele Kyari, Bola Tinubu, PMS