Businesses Brace For Inflation Surge As Petrol Hits N1,300/ltr

As petrol prices jumped to about N1,300 per litre in various parts of Nigeria on Monday, businesses across the country are beginning to prepare for a sharp rise in their operational costs.

This was confirmed by economists and the Organised Private Sector, who warned that the hike could fuel inflationary pressures, affecting goods and services, while companies scramble to adjust budgets and pricing strategies to cushion the impact on consumers.

As a fallout of the ongoing US-Iran war, a litre of Premium Motor Spirit (petrol) rose to about N1,300 per litre in most filling stations nationwide on Monday after the Dangote Petroleum Refinery hiked its gantry price from N995 to N1,175 a litre, sparking fears of a fresh rise in inflation among members of the Organised Private Sector.

Some filling stations also sold a litre for N1,250, N1,350 and N1,400 respectively.

The OPS warned that the surge in petrol prices could trigger higher transport and food prices. They urged the Federal Government to strengthen efforts to boost local refining capacity and look for ingenious ways to tackle the incessant surge in fuel prices.

This was even as the Nigeria Labour Congress slammed Dangote refinery’s repeated petrol price hikes, while there were reports on Monday that the G7 nations were planning to wade into the crisis by probably releasing emergency oil reserves.

According to  reports  Dangote’s N1,175 per litre petrol price on Monday marked the third upward adjustment within a week. This was as the price of crude hit about $115 per barrel before crashing to $98 later in the evening.

The latest price revision comes hours after it was  projected that petrol prices could rise for the third time within a week following the temporary suspension of petrol sales at the refinery on Sunday.

The refinery announced the price hike to marketers on Monday, raising the gantry price of PMS to N1,175 per litre from N995 per litre announced on Friday, representing an increase of N180, or about 18.1 per cent, within three days. It also jerked up the gantry price of diesel to N1,620.

A senior official of the refinery, who spoke on condition of anonymity because he was not authorised to comment publicly, confirmed the adjustment to one of our correspondents, stating that the revision had already been communicated to marketers and depot operators.

“Yes, the gantry prices have been adjusted. PMS is now N1,175 per litre while Automotive Gas Oil (diesel) is N1,620 per litre,” the official said. “The market has been extremely volatile, and replacement costs have shifted significantly in recent days. These adjustments reflect prevailing market fundamentals and the cost environment we are currently operating in.”

Checks on the industry pricing platform petroleumprice.ng showed that the revised rates had already been updated across petroleum depot pricing systems, indicating a shift in the benchmark price used by downstream marketers.

In a swift response, filling stations wasted no time in adjusting their pump prices from around N1,060 to N1,250. Our correspondents report that the Dangote-backed MRS filling in Olowotedo led the charge, raising the petrol price to N1,250. The NIPCO filling station in the area sold petrol at N1,200 as of Monday afternoon.

In Abuja, several filling stations along Airport Road adjusted their pump prices following the latest petrol price increase. Shafa and AA Rano sold petrol at N1,092 per litre, while Shema dispensed the product at N1,100 per litre in the morning. Optima recorded the highest price on the corridor at N1,270 per litre, while Matrix sold petrol at N1,092 per litre.

Dangote defends action

In an update on its X handle, the Dangote Group defended the price increase. Managing Director/CEO of the Dangote Petroleum Refinery, David Bird, said the refinery will continue to meet Nigeria’s fuel demand despite global supply disruptions and market volatility, adding that domestic refining gives Nigeria supply security, ensuring the country avoids fuel shortages and queues even when global markets are disrupted.

According to Bird, even under the crude-for-naira arrangement, Nigerian crude is purchased at international benchmark prices, meaning the refinery does not receive discounted crude. He said import-dependent countries are worst hit as the global oil crisis escalates.

“Global oil markets are experiencing extreme volatility, with crude prices rising from the mid-$60 range to nearly $120 per barrel within a week. The refinery is fully exposed to international commodity markets, including crude oil prices, freight rates, insurance, and financing costs. Freight costs have surged dramatically, with tanker costs rising from about $800,000 to roughly $3.5m per shipment in the current market environment,” he explained.

The MD added that the Dangote refinery operates at its full nameplate capacity of about 650,000 barrels per day, with the potential to increase production to around 700,000 barrels per day.

Speaking on the development, the Independent Petroleum Marketers Association of Nigeria said the surge is temporary, as prices will normalise immediately the war ends. “The price of fuel would come down once Brent crude comes down immediately after the war,” IPMAN spokesman Chinedu Ukadike said.

According to Ukadike, Pinnacle Oil was selling petrol to marketers at N1,200. Some others, like Fynefield, sold it at N1,230, according to petroleumprice.com. “Filling stations are only adjusting the pump prices based on what we buy from the depots or Dangote refinery,” Ukadike said.

Meanwhile, the Petroleum Products Retail Outlets Owners Association of Nigeria has tasked the Nigerian National Petroleum Company Limited to urgently strengthen domestic refining capacity as a strategic step to shield Nigeria from global petroleum market shocks.

PETROAN specifically called on the Group Chief Executive Officer, Bayo Ojulari, to facilitate the immediate commencement of production at Nigeria’s local refineries, particularly the Area 5 Plant at Port Harcourt Refinery and the Warri Refinery, both of which previously operated briefly before shutdown for profit index evaluation.

The National President of PETROAN, Billy Gillis-Harry, said the ongoing conflict involving Israel, the United States, and Iran is pushing global petroleum prices to alarming levels.  He noted that with no clear end to the conflict, petroleum product prices in both international and domestic markets are expected to rise sharply in the coming days.

Projecting future trends, he warned that PMS could rise close to N2,000 per litre while diesel may approach N3,000 per litre if the situation persists.