The Petroleum Products Pricing Regulatory Agency (PPPRA) has again reduced the price of petrol at gas stations in the country. The agency says petrol will now be sold at the pumps for between ₦123.50 and ₦121.50 per litre.
This is a downward revision from the previous price band of ₦123-₦125 per litre, which was fixed in May. It is also in line with the promise by the NNPC boss, Mele Kyari, to review petrol prices every month, as the realities of the oil markets allow.
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The PPPRA made its decision known via a circular dated May 31st. It said it had fixed the new rate after reviewing “prevailing market fundamentals,” and “considering marketers’ realistic operating costs.”
Industry watchers predicted this month’s price reduction after the ex-depot price of fuel was cut from ₦113 to ₦108 per litre in May. The ex-depot price is what marketers pay to purchase PMS from depot owners. With prices lower at the source, marketers can afford to sell the product to final consumers for less.
That move was a response to falling crude oil prices, which reached historic lows in April. Brent Crude, against which global crude oil prices are benchmarked, traded for $19 per barrel. That was a fraction of the $63 that it sold for on average back in January.
Falling oil prices and the resultant fall in local fuel prices have occurred due to shrinking demand for the product across the world. Restrictions on movement intended to check the COVID-19 pandemic have erased much of the world’s need for fossil fuels, as vehicles and factories remained grounded.
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But demand has since begun to pick up, as lockdown measures are being relaxed in many countries. This has sent oil prices back up. This month’s petrol pump prices may not fully reflect this. But if the oil prices continue to increase, Nigerians will eventually have to pay more for petrol.
It is, however, not clear what the government will do in this situation. Mele Kyari, Group Managing Director of the NNPC, has spoken about deregulating the downstream sector. But analysts point out that the PPMC’s action of fixing petrol prices every month does not constitute full deregulation.
Industry watchers are keen on seeing how this plays out, as some supporters of the present administration had previously spoken of the petrol price reductions as aimed at alleviating the economic difficulties brought on by the COVID-19 pandemic.
Featured image source: PPPRA Gov NG
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