We are not responsible for the hike of fuel price - FG

The Federal Government of Nigeria has distanced itself from the recent surge in petrol prices across the country, emphasizing that it has no control over the hike. On October 9, 2024, the Nigerian National Petroleum Company Limited (NNPCL) increased the price of petrol, raising it from ₦897 to ₦1,030 per liter in Abuja, with similar increments in other parts of the country. Lagos witnessed a jump from ₦855 to ₦998, while prices skyrocketed to ₦1,075 in the South-South, ₦1,070 in the North-East, and ₦1,045 in the South-East​ ~ Daily Post Nigeria

Government's Position

The Minister of Information and National Orientation, Mohammed Idris, clarified that the government was not responsible for the decision. He explained that the NNPCL’s move was driven by global energy market realities and not by directives from the government. Since the removal of the fuel subsidy in May 2023, the NNPCL has been absorbing losses to cushion the impact of international price fluctuations on Nigerians. However, the company reached a point where it could no longer bear the financial burden​ ~ Daily Post Nigeria & Naija Times

Idris pointed out that the Petroleum Industry Act (PIA), enacted in 2021, transferred the power to regulate fuel prices from the government to market forces. Under the PIA, the NNPCL operates as a limited liability company, making its operations subject to the dynamics of the global oil market. The minister added that international factors, such as the ongoing conflict in the Middle East, have significantly affected the energy market, pushing prices to unsustainable levels​ ~ Daily Post Nigeria

NNPCL's Rationale

The NNPCL has attributed the latest fuel price hike to multiple factors. The global crude oil price has risen due to supply chain disruptions, political instability, and the ripple effects of ongoing geopolitical tensions, particularly the war in the Middle East. This has increased the cost of refining and importing fuel into the country​ ~ Naija Times

The NNPCL had been covering the differential between the market price and the regulated pump price for months. However, with increasing crude oil prices and market instability, the NNPCL announced that it could no longer continue to absorb these costs. According to the company, allowing prices to reflect market conditions was a necessary step to sustain its operations​ ~ Daily Post Nigeria

Reactions from Stakeholders

The price hike has sparked widespread criticism and concern from various quarters. The Nigeria Labour Congress (NLC) swiftly condemned the increase, calling for immediate action to reverse the price adjustments. The NLC warned that the new fuel prices would exacerbate the already harsh economic conditions in the country, as inflation and cost of living continue to rise ~​ Naija Times

Similarly, the Centre for the Promotion of Private Enterprise (CPPE) criticized the timing of the hike, arguing that the country is not yet ready for the full deregulation of the petroleum sector. They expressed concerns that the price increase could further deepen poverty and inequality in the country​ ~ Daily Post Nigeria

The price surge also reignited debates on the effectiveness of Nigeria’s fuel importation policy and the need for local refining capacity. Many stakeholders have urged the government to fast-track the completion of the country’s refineries to reduce dependence on imported fuel, which is highly susceptible to global market fluctuations​ ~ Daily Post Nigeria

Broader Economic Impact

The fuel price hike comes at a time when Nigerians are already grappling with economic challenges, including rising inflation, unemployment, and a depreciating currency. The higher cost of fuel is expected to trigger a cascade of price increases across sectors, particularly in transportation and food prices, further worsening the cost of living. This development could also undermine the government’s efforts to stabilize the economy and reduce poverty​ Naija Times

In response to these concerns, the government has called for patience, explaining that the price hike is a temporary adjustment to global market realities. The Minister of Information reassured Nigerians that efforts are being made to stabilize the energy sector and alleviate the long-term effects of the deregulation process​ ~ Daily Post Nigeria

Conclusion

As the NNPCL continues to grapple with the effects of global oil market volatility, Nigerians are left to face the realities of higher fuel costs. While the government insists that the price hike is beyond its control, the impact on ordinary citizens and the broader economy is undeniable. Stakeholders are calling for a more robust and sustainable approach to managing the country’s energy needs, including the development of local refining capacity and a more strategic fuel importation policy.