From N198 to N1,300: The over 420% Alarming Surge of Fuel Prices in 18 Months

Nigeria, Africa’s largest economy, has witnessed an unprecedented surge in fuel prices. Within a span of merely 18 months of President Bola Ahmed Tinubu’s Administration, the cost of fuel has skyrocketed from N198 to N1,300 per litre, more than a staggering 420 per cent increase, leaving citizens reeling from the impact. Sunday Ehigiator reports

Before President Tinubu’s inauguration on May 29, 2023, fuel retailed at N198 per litre. Following his “Subsidy is gone” declaration, to end subsidies during his inaugural address, fuel prices immediately skyrocketed to N540 per litre at Nigerian National Petroleum Corporation Ltd (NNPCL) outlets.

Before this hike, NNPCL outlets nationwide sold fuel at the uniform rate of N198. However, prices now vary by location.

The NNPCL confirmed the price increase, citing the need to adjust to current market realities. This change has significantly impacted Nigerians, with many expressing concerns about a subsequent rise in the cost of living.

Speaking in a nationwide broadcast in 2023, Tinubu said, the trillions of naira yearly spent to sustain the subsidy were meant to better the healthcare and transportation sector, schools, housing, and national security, among others.

He said the money was being funnelled into the deep pockets and lavish bank accounts of a select group of individuals.

“This group had amassed so much wealth and power that they became a serious threat to the fairness of our economy and the integrity of our democratic governance.

“To be blunt, Nigeria could never become the society it intended to be as long as such small, powerful yet unelected groups hold enormous influence over our political economy and its institutions.

“The whims of the few should never hold dominant sway over the hopes and aspirations of the many. To be a democracy, the people, not the power of money, must be sovereign.

“Removal of this once helpful device that had transformed into a millstone around the country’s neck had become inevitable,” he said.

Another price adjustment

On July 18, 2023, Nigerians faced another devastating blow when the pump price at NNPCL outlets surged from N540 to N617 per litre. This increase came just two months after President Tinubu’s inaugural address, where he declared the end of fuel subsidies, causing prices to skyrocket from N198 to N540.

The initial hike had already plunged the nation into a severe cost-of-living crisis, with citizens struggling to afford necessities. Small businesses were forced to increase prices, transportation costs skyrocketed, and food prices became unaffordable for many. The latest price increase only exacerbated the hardship.

The Group Chief Executive Officer of NNPCL, Mele Kyari, attributed the rise to market forces, emphasizing that it reflects the dynamics of a market-regulated pricing model.

After meeting with Vice President Kashim Shettima, Kyari clarified that prices would fluctuate based on market realities, sometimes increasing and sometimes decreasing. He also dismissed claims that the price hike resulted from a petrol supply shortage.

Fuel Queues amidst Another Hike

13 months after the last increment witnessed protracted fuel queues attributed to a shortage in supply, occasioned by NNPCL’s outstanding debt obligations to international oil traders. Although the corporation did not disclose the exact amount owed to oil traders, reports said the debt was to the tune of $6.8 billion.

NNPCL initially downplayed the crisis, insisting that everything was under control. But as fuel queues persisted and prices of food and other essential commodities got more inflated, the company’s subsequent admission of a $6.8 billion debt revealed a more complex truth.

On September 1, 2024, NNPC spokesperson Olufemi Soneye announced that the corporation’s fuel supply was under threat. However, experts suspected a hidden agenda, believing the government aimed to increase petrol prices to N950-N1,000 per litre. They claimed government officials had been promoting this narrative for weeks.

Just two days later, on September 3, 2024, NNPCL hiked the pump price from N617 to N897 per litre, a staggering 45 per cent increase. The move coincided with the anticipated commencement of fuel production at the Dangote Refinery.

NNPCL would later claim to have purchased fuel from Dangote Refinery at a cost of N898 per litre, sparking controversy. However, Dangote Refinery swiftly denied this claim.

This move sparked concerns about the government’s handling of the fuel crisis and the potential for further price hikes, as part of a grand plan of selling fuel above N1,000 per litre.

Tinubu Defends Hike

Addressing members of Nigerians in the Diaspora Organisation in China (NIDO China) and the Nigerian community at the China World Hotel, Tinubu described the increments as a bold and necessary move to reform Nigeria. He said these changes are crucial for the country’s transformation and progress.

According to him, “Nigeria is going through reforms, and we are taking very bold and unprecedented decisions. For example, you might have been hearing from home in the last few days about fuel prices.

“But, can we help it? Can we develop good roads like you have here? You see electricity being constant in quantity and quality. You see water supply, constant and running, and you see their good schools.

“And we say we want to hand over a banner without stain to our children? What is the critical part to get us there if we cannot make hard decisions to pave the way for a country that is blessed and so talented?”

Hike Now over N1,000/litre

On October 9, 2024, Nigeria’s fuel prices surged from N898 to N1,030 per litre as official price. This increase follows NNPC’s exit as the middleman in the Dangote Refinery fuel purchase deal. However, fuel stations sell between N1,200 to N1,500 with few stretching it to N1,700.

Previously, NNPC was the sole buyer of fuel from Dangote Refinery, absorbing a subsidy of N133 per litre to bridge the price gap between the refinery’s price and the retail price.

Now, marketers negotiate prices directly with the refinery under a ‘willing buyer, willing seller’ arrangement, similar to diesel and kerosene pricing.

Dangote Refinery, with its 650,000 barrels per day capacity, began processing petrol in September, initially with NNPC as its sole off-taker, according to Devakumar Edwin, Vice President at Dangote Industries.

This shift towards a fully deregulated oil market marks a significant change in Nigeria’s fuel pricing landscape, with potential long-term effects on the economy and citizens.

Impact and Reactions of Nigerians

Nigerians continued to bear the brunt of these economic challenges, with many wondering when relief would come. The fuel subsidy removal, intended to stem corruption and boost the economy, has instead worsened the daily struggles of citizens.

With this recent increase, the country is facing a tough time with a potential mass resignation of its workforce looming due to skyrocketing transportation costs and stagnant salaries.

Although scrapping fuel subsidies has increased revenue sharing among the three tiers of government, it’s coming at a steep price – pushing millions of Nigerians into multidimensional poverty and forcing small and medium-scale enterprises to shut down as inflation continues to soar. The benefits are not trickling down to the people who need it most.

The situation is dire, with workers spending almost half of their monthly salaries on transportation alone. For instance, one worker shared that his daily transportation fare tripled from N800 to N4,500 daily, while another resigned from her job due to unsustainable transportation costs, despite earning a salary of less than N100,000.

This crisis has led to desperate measures, with some employees opting to sleep in their offices during the week to cut costs. The impact is far-reaching, affecting not only individuals but also businesses struggling to stay afloat.

Some Nigerians have also taken to social media to express their displeasure with the recent hike in fuel prices.

On X, @Sthabbey wrote, “This situation is becoming unacceptable. Nigerians deserve respect from @officialABAT and his administration. This is unwarranted, and our patience has been stretched to its limit.”

Another user identified as @Chambez84 wrote, “Thank you Mr President for us. We like suffering and I am happy about it. Please suffer us the more Nigerians love you. I am suggesting for NNPC to sell the fuel at N5000 per litre, it will strengthen our economy.”

@El_khaleel wrote, “Tinubu just takes the price that you want it to be. We are tired of your policies. Yesterday’s price is not today’s price.”

@khalifakila wrote, “Nigerians are very patient people wallahi. This can’t happen in other countries. Just wake up one morning and add the price of PMS and life goes on.”

@Sirpascal wrote, “Instead of Nigerians to benefit from Dangote refinery, they’re paying more for fuel, even though crude is sold in Naira to them. Nigeria is not a place for the living.”

On Facebook, Abdullahi Bala Muhammad said: “The president should call them to order because what they are doing these days is getting out of hand. They are pushing poor Nigerians to the wall and if they push back things won’t be good for the government.”

Quote

Although scrapping fuel subsidies has increased revenue sharing among the three tiers of government, it’s coming at a steep price – pushing millions of Nigerians into multidimensional poverty and forcing small and medium-scale enterprises to shut down as inflation continues to soar. The benefits are not trickling down to the people who need it most