October 11, 2024 [Reuters]- Nigeria’s state-owned oil company, NNPC Ltd, has increased petrol prices by over 15%, marking the second hike in less than a month and the exit from a costly subsidy programme that has strained its finances.
At NNPC fuel stations in Lagos the price of gasoline rose to 998 naira per litre ($0.6257) from 858 naira, while in Abuja the price increased to 1,030 naira per litre from 950 naira. Long queues formed as customers came to terms with higher prices.
NNPC, the country’s sole importer of refined products, can now recover its costs in full, having bought gasoline from the Dangote Oil Refinery at 898 naira per litre.
This is the first time in three decades that Nigeria is selling gasoline at full market prices, relieving the treasury of the heavy cost of subsidies, projected to cost the government at least $3.7 billion this year.
President Bola Tinubu scrapped a costly but popular subsidy on petrol last year when he took office, to cut government expenditure. But he reintroduced subsidy partly after inflation skyrocketed, worsening a cost of living crisis and stoking tension among the population.
By September, NNPC said it faced severe financial strain, admitting it was unable to continue importing fuel after weeks of scarce supplies at its petrol stations.
The price increase has sparked criticism from labour unions to manufacturers, who warn that it will worsen the cost-of-living crisis.
Gasoline prices are a particularly sensitive issue in Nigeria, where millions of households and small businesses rely on generators powered by fuel due to the country’s creaking national electricity grid.
Last week, Nigeria began selling crude oil to the Dangote Refinery in naira, with the understanding that the refinery would fully meet the country’s fuel needs. This month, NNPC is supplying the refinery with 13 cargoes of crude oil.
Edwin Devakumar, head of the Dangote Refinery, said the facility now has the capacity to meet all of Nigeria’s needs.
Industry insiders say that with gasoline now being sold at market rates, NNPC will no longer be the sole buyer of products from the Dangote Refinery.
“We have applied to buy directly from the Dangote Refinery, but this hasn’t been finalised yet. For now, we are still buying through NNPC,” said Billy Gillis-Harry, head of a local fuel traders association.
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