Economy

Rising Diesel, Kerosene Prices Hit Households, Businesses

Published

6 years ago

May 31, 2018

Rising Diesel, Kerosene Prices Hit Households, Businesses

The prices of diesel and kerosene have risen significantly on the back of the increase in global oil prices, putting more pressure on households and businesses in the country.

The international oil benchmark rose to $80.50 per barrel on May 17, its highest since November 2014, but fell below $75 per barrel on Tuesday.

Many businesses, especially manufacturers, in the country have over the years continued to rely heavily on diesel-powered generators for electricity as supply from the national grid remains poor.

The price of diesel ranges from N230 to N250 per litre in many filling stations in Lagos, while kerosene, which a lot of households still depend on for cooking, sells for as high as N240 per litre in some stations.

The volume of kerosene imported into the country has dropped drastically in recent months. It declined to a low of 5.49 million litres in March from 27.15 million litres in February and 34.25 million litres in January, according to the National Bureau of Statistics.

The NBS said the average price per litre paid by consumers for kerosene increased by 3.53 per cent to N278.49 in April from N268.99 in March.

It said Abuja had the highest average price per litre of kerosene with N316.67. This, it stated, is closely followed by Cross River (N315.56) and Nasarawa (N309.52); while states with the lowest average price were given as Akwa Ibom (N247.22), Abia (N245.25) and Katsina (N244.87).

The average price paid by consumers for automotive gas oil (diesel) decreased by one per cent to N204.35 in April from N206.41 in March, according to the NBS.

“States with the highest average price of diesel were Taraba (N250.00) Adamawa (N227.50) and Sokoto (N224.00). States with the lowest average price of diesel were Oyo (N191.28), Delta (N190.77) and Bayelsa (N188.33),” it said.

The National Operations Controller, Independent Petroleum Marketers Association of Nigeria, Mr. Mike Osatuyi, said, “The two products are already deregulated, and the increase in their prices is a function of crude price. Crude oil recently rose to $80 per barrel, so the landing cost of those two products is going to rise.

“As far as crude oil price remains high, the price of the products will continue to go up. Even if the exchange rate is constant, it has to be a reflection of the international price.”

The Director-General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, said, “This is one point that we often gloss over when we have high oil prices. We celebrate that crude oil price has gone up, that we are getting more revenue but we often don’t realise or don’t notice that high oil prices also lead to high energy cost.”

He noted that because the products had been fully deregulated, “their prices fluctuate and change in line with crude oil prices, particularly because our refineries are not functioning.

“So, we are paying dearly for the fact that we don’t have refineries that function; we pay highly for the fact that crude oil price is going up, and there is nothing in the policy framework to kind of cushion the effects on the private sector.”

According to Yusuf, the hike in the prices of the products increases businesses’ costs of production; it makes competitiveness, business sustainability, and the capacity of businesses to generate employment more difficult.

“It makes economic diversification also more difficult because energy is central to many economic activities; so my view is that it is something that we need to take proper notice of; that when we have high oil price, energy cost also goes up; and it hurts a lot of investors,” he added.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Nigeria’s Q3 Foreign Trade Skyrockets: Crude Oil Revenue Surges by 83.23% to N8.54tn

Published

13 hours ago

December 5, 2023

Investors King

Nigeria’s foreign trade expanded by 53.16% year-on-year to N18.80 trillion in the third quarter (Q3) of 2023.

The surge was primarily propelled by an impressive 83.23% spike in crude oil revenue to N8.54 trillion, a substantial increase from N4.66 trillion recorded in the same quarter of the previous year.

This was reported by the National Bureau of Statistics (NBS) in its ‘Foreign Trade in Goods Statistics (Q3 2023)’ that highlighted the nation’s trade balance and economic outlook.

The report noted that total exports rose by 60.78% to N10.35 trillion.

Mr. Gbenga Komolafe, CEO of the Nigerian Upstream Petroleum Regulatory Commission, emphasized the importance of viability in retaining exploration leases.

He said, “Based on PIA (Petroleum Industry Act), the commission is focused on delivering value for the nation so only firms that are technically and financially viable will keep their leases.”

The report outlined the dominance of crude oil in exports, constituting 82.50% of total exports, while non-crude oil products contributed N677.57 billion or 6.55% of total exports. The positive trade balance stood at N1.89 trillion.

The top five export destinations for Nigeria included Spain, India, The Netherlands, Indonesia, and France, collectively accounting for 45.98% of total export value.

On the import side, China, Belgium, India, Malta, and the United States were the major sources, comprising 57.18% of total imports, valued at N4.84 trillion.

While these promising trade figures indicate a robust economic performance, challenges in the oil sector persist, with the country’s crude oil production below the 2023 target.

The government’s commitment to increasing production aims to boost revenue and fund strategic national projects, as highlighted by Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri.

The surge in exports, possibly linked to the recent naira devaluation, underscores the intricate relationship between economic policies and trade dynamics, shaping Nigeria’s economic trajectory.

Economy

Federal Government to Earn Over $500 Million in INTELS Deal

Published

2 days ago

December 4, 2023

Investors King

The Nigerian Ports Authority (NPA) has unveiled an agreement with INTELS Nigeria Limited that is set to bring substantial financial gains to the federal government.

The comprehensive deal, negotiated over weeks, not only resolves a contentious pilotage contract but also promises to bolster Nigeria’s coffers by over $500 million.

The accord encompasses a multifaceted approach to financial benefits, including an interest waiver of $193,317,556 and a significant reduction in the interest rate on outstanding debt.

The debt, originally at a six-month London Interbank Offer Rate (LIBOR) + 6.5%, has been revised to a more favorable six months Secured Overnight Financing Rate (SOFR) + 3%.

Such financial restructuring is anticipated to save the government a staggering $326.8 million over the next 15 years.

NPA, in a detailed breakdown, elucidated that the agreement further involves spreading the debt repayment over 15 years, with the initial two years being interest-free.

Additionally, there is a commendable reduction in the commission percentage, dropping from 28% to 24.5%, a move that aligns with the government’s commitment to optimizing financial resources.

The Minister of Marine and Blue Economy, Adegboyega Oyetola, received accolades for his tireless efforts in steering the negotiations to a successful conclusion. NPA expressed gratitude for his commitment to putting Nigeria first, emphasizing the critical role played by the minister in resolving the long-standing INTELS dispute.

Former Vice President Atiku Abubakar, however, denied benefiting from the reinstatement of INTELS contracts.

He clarified that his divestment from the company remains unchanged, emphasizing that he cannot be a beneficiary of the restored pilotage monitoring business.

NPA’s move to ensure a resolution with INTELS is not only seen as a financial triumph but also as a strategic step towards fostering economic stability.

The agreement is poised to have a positive ripple effect on revenue generation and underscores the government’s commitment to diplomatic and economically viable solutions.

Economy

Nigeria’s Refinery Output Plummets by 92% in a Decade

Published

2 days ago

December 4, 2023

Investors King

Nigeria’s local refineries recorded a 92% decline in output over the past decade, according to the Statistical Review of the World Energy 2023 report.

The data unveils a drastic drop in refining capacity, plummeting from 92,000 barrels per day (bpd) in 2012 to a mere 6,000 bpd in 2022.

This disconcerting revelation is echoed in the Organisation of the Petroleum Exporting Countries’ (OPEC) Annual Statistical Bulletin 2023, which underscores an 81% reduction in Nigeria’s crude oil refining capacity, falling from 33,000 bpd in 2018 to 6,000 bpd in 2022.

Despite owning four government-owned refineries, located in Port Harcourt, Warri, and Kaduna, with a collective capacity of around 4.45 million bpd, Nigeria continues to heavily rely on importing refined petroleum products.

This dependency raises questions about the nation’s resilience and self-sufficiency in the energy sector.

Minister of State for Petroleum, Heineken Lokpobiri, had previously announced plans for the Port Harcourt refinery to commence operations by the end of the current year, with the Warri and Kaduna refineries expected to follow suit in early 2024.

This revelation comes amid rising concerns over Nigeria’s continued reliance on importing refined petroleum products, even with substantial investments in refinery infrastructure.

The decline in local refining exacerbates the challenge, leading to soaring petrol prices and a strain on the nation’s economic landscape.

Industry experts stress the urgency of revitalizing local refineries, emphasizing that dependence on imports is neither sustainable nor conducive to the country’s economic well-being.

As Nigeria grapples with the complexities of its energy dynamics, the impending revival of local refineries stands out as a crucial solution to navigate these challenging times.