The imported petrol’s landing cost has exceeded N1,000 per liter amid deepening foreign exchange challenges, as revealed by BusinessDay. At the black-market rate of N1,500 per dollar, the landing cost surged to N1,009/liter from N720/liter in October 2023, encompassing the international product price, shipping, insurance, and other charges.
“The rising landing cost of petrol is a result of the rising FX crisis. There are interventions in the market through subsidies as most Nigerians cannot afford the market price for petrol,” stated a senior executive in the downstream sector.
After Monday’s trading, the naira depreciated by 4.19 percent against the dollar, reaching N1,534.39 compared to N1,469.97 on Friday. The parallel market saw a 1.33 percent devaluation, with the dollar trading at N1,505 on Monday, up from N1,485 on Friday.
Bismarck Rewane, CEO of the Financial Derivatives Company, noted a reduction in subsidy, asserting that the current petrol price would be higher without it. Energy analyst Aisha Mohammed mentioned partial government subsidization for political, social, and economic reasons, highlighting the societal and political costs.
The landing cost of N1,009 excludes charges like Nigerian Ports Authority fees, vessel charges, Nigerian Maritime Administration and Safety Agency charges, and other distribution costs, some of which are in dollars. Calls for a review to reduce petrol costs emphasize resisting the dollarization of the Nigerian economy.
Efforts to confirm if the federal government reverted to petrol subsidy proved unsuccessful, and concerns persist regarding transparency in allocating surplus funds from subsidy removal. State governors allegedly converting naira cash to dollars instead of improving infrastructure and human capital contribute to currency value pressure.
