If the Federal Government’s pricing template is anything to go by, Nigerians may have to brace for an increase in the pump price of fuel as oil prices begin to head towards the $40 region, following countries’ eased lockdown measures, showing signs of gradual recovery in demand, supported by on-going output cuts effective May.
Yesterday afternoon, Brent crude hit $35.34 per barrel, U.S. West Texas Intermediate crude was up 7.44 per cent, to hit $31.62 a barrel, the highest in nine weeks or since March 16. Nigeria’s Bonny Light rose by 10.68 per cent to hit $29.84 per barrel.
Although the Federal Government failed to review the N123.5 to N125/litre pump price of petrol for May, despite continued crash of crude oil price, it may adjust the price for next month if oil prices rise above the $40 threshold.
The delay by the Petroleum Product Pricing Regulatory Agency (PPPRA), to review the price of Premium Motor Spirit (PMS), popularly known as petrol for May, also increase the profit margin of oil marketer to N15.5 per litre.
This is as a result of the recent slash in the ex-depot price of petrol by the Nigerian National Petroleum Corporation (NNPC) from N113.28/litre to N108/litre. That is the price at which the national oil company sells petrol to marketers.
With oil prices making a Fuel pump price may rise in June as oil heads towards $40rally, there are concerns for consumers and the real sector as industry observers had urged the Federal Government to make pronouncements that provide clarity on where, when, and how Nigeria would do away with petroleum subsidy.
The Federal Government said in March, that it had bowed to long-standing pressure to restructure the downstream oil sector and had therefore removed oil subsidy after the country was hit by lower oil prices which placed more pressure on its foreign exchange reserves.
Precisely, the Lagos Chamber of Commerce and Industry (LCCI), and Transparency International (TI), among others, asked the presidency to clarify terms for the subsidy removal.
The pressure groups, also questioned the resolve of the NNPC on the subsidy, expressing worry on which legal regime “is this declaration made enforceable since the Petroleum Industries’ Bill (PIB) is not in-sight anytime soon.”