…Current realities support N200/litre — Iledare
By Michael Eboh
Petrol stations in Abuja has adjusted their pumps to reflect the hike in the ex-depot price of the Premium Motor Spirit, PMS, by the Petroleum Products Marketing Company, PPMC, with some of the stations raising the price as high as N161 per litre.
In a survey round petrol stations in Abuja, it was also observed that all the stations were opened and were seen dispensing the commodity to motorists without any hitch.
Specifically, at the Oando petrol station at Dutse, along the Abuja-Kaduna Expressway, only a few cars were seen inside, while the station was dispensing the product to motorist at N161 per litre; while Eterna petrol station and Gegu petrol station, few blocks apart, were selling at N159 per litre and N158.1 per litre respectively.
In addition, the NNPC Retail station at Katampe, along the Abuja-Kaduna Expressway, was selling at N160 per litre; Total retail outlet at Tipper Garage, along the same road, was selling at N148.8 per litre, while Bozimo petrol station at Karu is selling at N160 per litre.
In addition, reaction had continued to trail the recent hike, with some stakeholders saying the increase was inevitable.
In his response, Uche Uwaleke, Professor of Finance and Capital Markets of Nasarawa State University, Keffi and former Commissioner of Finance of Imo State, however, warned that the hike would heighten inflationary pressure and worsen the living standards of Nigerians.
He said: “This is clearly a downside risk to inflation. In the coming months, I expect inflationary pressure to heighten as crude oil price recovery in the International market necessitates a hike in domestic pump price of imported fuel. This situation will be compounded by naira devaluation.
“The alternative is petrol subsidy which the government cannot afford now as this may not have been provided for in the 2020 budget.
“Again, expecting a government already saddled with huge debt to borrow to subsidize price of petrol does not make economic sense.
“With all the economic headwinds, there is no question about a spike in cost of living in the coming months.”
He, however, stated that the solution remained that passage of the Petroleum Industry Bill, PIB, into law to pave way for investors in the oil refining sector.
This, according to him, would also put a stop to the importation of petroleum products well before Dangote refinery takes off to fill the gap.
N200 per litre
Also speaking, Professor Wumi Iledare, Ghana National Petroleum Corporation’s Chair of Petroleum Economics at Institute of Oil and Gas Studies, IOGS, in the University of Cape Coast, Ghana, however, stated with the current economic reality, the price of PMS, also known as petrol, should be selling at N200 per litre.
He said, “The reality on the ground is not pretty at all with respect to what the price ought to be. At the current official exchange rate of $1 to N385, N200 is about right because of the level of demand driven by population and quality of life. Keep in mind that any attempt to invoke subsidising petroleum has unintended consequences.
“Of course, the opportunity was missed at lower crude oil price. We suggested not to set the price then, but fear of unrest predominate government action then.
“The economy is highly dependent on oil revenue. Salaries are low and not paid. It is double whammy for petrol to go up, but no budget to subsidise it.
“We all need to adjust and perhaps pump more money to the economy. Invoke patriotism, if the government has to, with carrot and stick to those owing government money.
“If Ghana is surviving, Nigeria’s exchange rates call for at least N200 per litre in Nigeria. In Ghana, a litre is about N325-N350 equivalent. Like Nigeria, PMS consumed are imported. Lessons can be learnt from Ghana.