During the build-up to the 2023 presidential election, the All Progressives Congress (APC) candidate, Bola Ahmed Tinubu, promised to reduce the rising cost of fuel if elected.
While addressing supporters at a campaign rally in Abeokuta, the Ogun State capital, on January 25, 2023, Tinubu discussed various issues, including fuel scarcity and price hikes.
Before the rally, there were speculations that the petrol price, selling at around N195 per litre, could rise to N200 per litre. However, Tinubu assured Nigerians that if elected, his administration would not only prevent further increases but also review the price of petrol downward.
Speaking in his native Yoruba, Tinubu said, “They are plotting, but they will fail. They said fuel prices will increase and reach N200 per litre. Go and relax; we will bring it down.”
However, after defeating Atiku Abubakar of the Peoples Democratic Party (PDP) and Peter Obi of the Labour Party (LP) to emerge Nigeria’s President, the Tinubu-led government’s actions took a different turn.
In his inaugural speech on May 29, 2023, Tinubu dashed Nigerians’ hopes for lower fuel prices by officially announcing the removal of the fuel subsidy.
Since the subsidy was removed, the price of Premium Motor Spirit (PMS) has continued to rise across the country.
In this article, Tribune Online examines the four instances of petrol price hikes under Tinubu’s administration over the past 16 months.
1. First Increment – May 2023
The first petrol price hike occurred shortly after Tinubu announced the subsidy removal in May 2023, disrupting the petroleum industry. Following the announcement, the Nigerian National Petroleum Company Limited (NNPCL) raised the price from N195 to between N448 and N557 per litre, marking a 185.64% increase. The federal government defended the hike, explaining that the subsidy, which cost over N400 billion monthly, was unsustainable.
2. Second Increment – June 2023
Barely a month later, in June 2023, the price of petrol rose again from N557 to N617 per litre, an increase of 10.77%. NNPCL attributed the hike to market dynamics. Chinedu Okoronkwo, President of the Independent Petroleum Marketers Association of Nigeria (IPMAN), confirmed that global economic factors beyond local control were responsible for the increase.
3. Third Increment – September 2024
The third adjustment came in September 2024, with prices jumping by 45.38% to between N855 and N897 per litre. NNPCL revealed that the increase resulted from financial difficulties, including high debts to petrol suppliers. In a statement, NNPCL’s Chief Corporate Communications Officer, Olufemi Soneye, disclosed that the company was under severe financial pressure, which posed a threat to the sustainability of fuel supply.
4. Fourth Increment – October 2024
The most recent increase followed NNPCL’s decision to step back from its role as a middleman between marketers and the Dangote Refinery. This opened the market to direct dealings between the refinery and marketers. Consequently, NNPCL and other fuel stations adjusted their pump prices to align with refinery costs, leading to a 15% increase to N1,030 per litre.
Dangote Refinery: Nigerians’ Hope in ‘Private Messiah’
When the Group Chairman of Dangote Industries Limited, Aliko Dangote, announced the official rollout of Premium Motor Spirit (PMS), commonly known as petrol, on Tuesday, 3 September 2024, Nigerians were filled with hope and optimism for a reduction in fuel prices.
This development was hailed as a landmark achievement for the country, which had struggled for decades to produce even a single litre of gasoline despite several promises by the Tinubu-led administration to revive the moribund Port Harcourt Refinery, among others
However, instead of reducing fuel prices, petrol prices have increased twice since the commencement of operations at the Dangote Refinery. This aligns with the position of Olufemi Soneye, Chief Corporate Communications Officer for the Nigerian National Petroleum Company Limited (NNPCL), who stated that the refinery’s operations alone do not guarantee lower fuel prices.
According to Soneye, global market forces determine the pricing of petroleum products from any refinery, including the Dangote Refinery.
Additionally, disagreements between NNPCL and the Dangote Refinery over key operational issues, such as NNPCL’s role as the sole off-taker and pricing strategies, have further complicated the refinery’s impact on domestic fuel prices.
Subsidy Removal: World Bank takes side
The World Bank recently disclosed that Nigeria spent nothing less than N4.5 trillion in 2022 on subsidising petrol to keep prices below market levels.
This revelation was made by Indermit Gill, Senior Vice President of the World Bank Group, on Monday at the 30th Nigerian Economic Summit in Abuja.
According to him, the amount equivalent to $15 billion at the prevailing free market exchange rate was lost through fuel subsidies and exchange rate disparities.
“Together, these two subsidies, the implicit one from the exchange rate and the explicit PMS subsidies amounted to a staggering 10 trillion Naira a year by 2022, or 15 billion dollars at the free market exchange rate,” He partly said.
Nigeria’s petrol subsidy, a lifeline for smugglers — NNPCL
The NNPCL boss, Mele Kyari, recently disclosed that Nigeria’s petrol subsidy, before its removal, served as a lifeline for cross-border smugglers.
According to him, smugglers exploited the subsidy system to earn as much as N17 million per truck by transporting fuel across the border to neighbouring countries.
He explained that a 6,000-litre truck sold within Nigeria, particularly in states like Borno, would generate only N500,000, making cross-border smuggling a highly lucrative venture.
However, Kyari highlighted that the removal of the subsidy has effectively halted these operations, as fuel prices now reflect market realities, cutting off the illegal profits once enjoyed by smugglers.
He said, “In the last 47 years, PMS has always been subsidised and subsidy is creating arbitrage; that means there is a difference between price in one location, lower than what it should be in another location.
“And when Mr President announced the subsidy, what he did was recalibrate the price. There is no longer any value in anyone taking the product across the border. If you do, you’re not going to make those profits again.
“In a 6,000 litre truck, you can actually gain up to N17 million from just one truck. How are you going to stop someone who with two trips can easily make N17 million times two, which is the price of the truck itself.
“However, when you take a truck legally, maybe N8 million, say, to Maiduguri, the legitimate value you have is less than N500,000. Why will I see N17 million and then take all the trouble to go to Maiduguri, keep it in the fuel station for one month and then make N3 to N4 million. So you see, as long as you are not in a subsidy regime, you won’t lose money.”
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