The landing cost of Premium Motor Spirit (PMS), commonly known as petrol, has surged by 46.8% year-on-year (YoY) from N545.83 per litre in May 2023 to N1,026.71 per litre in May 2024.

This sharp increase is attributed to a combination of escalating foreign exchange rates and rising crude oil prices in the international market.

The National Bureau of Statistics (NBS) has reported a national average retail price for petrol of N701.24 per litre in April 2024, a 176.02% YoY increase from N254.06 per litre in April 2023.

This escalation in fuel prices has had a ripple effect on the cost of living, with transportation expenses soaring and subsequently driving up the prices of goods and services across the country.

The breakdown of the total cost reveals that additional charges, including port-related fees, transportation logistics, and marketers’ margins, push the delivery cost at filling stations to nearly N1,052.39 per litre.

This development contradicts the federal government’s claims of having scrapped fuel subsidies under President Bola Tinubu’s administration.

According to sources within the oil marketing sector, the outlook for June is grim, with expectations of further increases due to worsening forex scarcity and a deteriorating exchange rate, which currently stands at N1,510 to a dollar—a significant differential of N458.71 per litre from the previous year.

Oil marketers have voiced concerns over the unprofitability of importing petrol at the current pump prices.

The transactional analysis of a major operator, as reviewed by Energy Vanguard, shows that marketers are paying N1,052.39 per litre as the total direct cost.

This figure includes costs such as freight, port charges, and various levies, which have all been exacerbated by rising crude oil prices.

The International Monetary Fund (IMF) has weighed in, suggesting that the Nigerian government has effectively resumed subsidy payments through price caps at retail stations.

The IMF has recommended that the government completely halt subsidy payments to free up funds for critical programs and alleviate the fiscal burden on the state and federal budgets.

Mr. Robert Dickerman, Managing Director/CEO of Pinnacle Oil, highlighted the adverse effects of the subsidy regime.

He stated, “Nigeria is currently paying about N1 trillion monthly in petrol subsidies. This subsidy makes gasoline in Nigeria the cheapest in Africa, encouraging smuggling to neighboring countries and depriving Nigeria of valuable resources.”

The situation is exacerbated by the volatility in the international oil market, which discourages further importation and investment.

The Nigerian National Petroleum Company Limited (NNPCL) remains the sole importer of PMS, underscoring the market’s instability and the challenges faced by private marketers.

The nationwide strike initiated by the Nigeria Labour Congress (NLC) remains in effect despite a recent agreement reached with the Federal Government.

The strike, which has significantly impacted the country’s economy, will continue until a review meeting by the union’s organs later today.

In a statement posted on social media platform X on Tuesday, the NLC reaffirmed its commitment to the ongoing industrial action, which has led to widespread disruptions across various sectors.

“Until we hear from our organs at our meeting scheduled for today, June 4, we are still on strike,” the post read.

This development follows a six-hour negotiation session held on Monday in Abuja between the Federal Government and the leadership of organized labour.

During the meeting, the government reiterated President Bola Tinubu’s commitment to increasing the minimum wage to an amount higher than N60,000.

This gesture was intended to address one of the key demands of the labour unions.

The agreement, signed by Minister of Information and National Orientation Mohammed Idris and Minister of State for Labour and Employment Hon. Nkeiruka Onyejeocha on behalf of the Federal Government, emphasized the administration’s dedication to resolving the wage issue.

The tripartite committee, comprising representatives from the government, labour unions, and the private sector, is set to meet daily over the next week to finalize the new national minimum wage.

Representatives of the organized labour, including NLC President Joe Ajaero and Trade Union Congress (TUC) President Festus Osifo, were also signatories to the agreement.

The labour leaders consented to convene meetings with their respective union organs to consider the government’s new offer and ensure that no worker would face repercussions for participating in the strike.

Despite these assurances and the government’s proposal, the NLC has chosen to maintain the strike pending the outcome of today’s internal review meeting.

The decision underscores the union’s cautious approach and its determination to secure a tangible and satisfactory outcome for Nigerian workers.

The continued strike has brought many sectors of the economy to a halt, affecting businesses, transportation, and public services.

The protracted industrial action highlights the deep-seated issues within Nigeria’s labour market and the urgent need for comprehensive reforms.

Nigeria’s Finance Minister and Coordinating Minister of the Economy, Wale Edun, has assured citizens that the nation is on the right path to economic recovery, with food prices expected to decline and availability to increase as inflation rates begin to slow down.

Edun’s optimistic forecast came during an appearance on Channels Television on Sunday, where he outlined the government’s ongoing efforts to bolster agricultural production and combat inflation.

Edun highlighted the government’s proactive measures in increasing agricultural output as a pivotal factor in reducing inflation.

“Agricultural output is up to bring down inflation. Inflation is slowing month on month. Food prices will come down; food availability will increase,” he stated.

Inflation at a 28-Year High

The minister’s comments follow a 28-year high increase in the inflation rate to 33.69 percent in April, the 16th consecutive month of increase.

Despite this, Edun pointed to a slight month-on-month deceleration, with April’s inflation rate at 2.29%, down from 3.02% in March.

In addressing the high inflation, Edun acknowledged that food insecurity is a global issue, not confined to Nigeria alone. He noted that approximately 30 percent of the global population faces food insecurity.

The minister also emphasized that while the government’s macroeconomic policies have contributed to inflationary pressures, steps are being taken to address these challenges.

“Provision of food, cheaper transport, and creation of jobs are being focused on,” Edun explained. “It does take time for positive outcomes to be felt, but we’re working on improving the citizen’s purchasing power.”

Economic Expert Insights

However, some experts remain cautious about the pace of inflation’s decline. Uchenna Uzo, a professor of marketing and faculty director at Lagos Business School, suggested that while inflation might decrease, it is unlikely to fall to the 21 percent projected by the Central Bank of Nigeria.

“We will see a drop in the country’s inflation but it’s going to be a mild and moderate drop,” Uzo said, highlighting the absence of increases in minimum wage or real incomes as a potential brake on demand.