The price of Premium Motor Spirit (PMS), popularly known as petrol, has climbed to about ₦1,400 per litre in several fuel stations across Lagos, Ibadan and Abuja raising fresh concerns over higher transportation costs and another round of increases in the prices of goods and services.
The latest development followed an ₦85 per litre increase in the gantry price of petrol by Dangote Petroleum Refinery, which moved its price from ₦1,265 to ₦1,350 per litre effective September 12.
The latest adjustment is the fourth increase by the refinery since August 21, bringing the total rise in its petrol price to ₦185, or 15.9 per cent, in just 22 days.
Following the adjustment, several marketers have reviewed their pump prices upward.
Checks across some retail outlets stations by NPO Reports in Lagos, Ibadan and Abuja showed petrol selling for ₦1,400 per litre.
The latest increase is coming amid a sharp rise in international crude oil prices, with Brent crude trading above $100 per barrel.
The increase in crude prices has raised the cost of refined petroleum products and placed additional pressure on the domestic downstream market.
Nigeria’s deregulated petroleum market means changes in crude prices, refinery costs, transportation, exchange rates and other supply-chain expenses can feed into the price motorists pay at filling stations.
Industry reports indicate that the latest Dangote adjustment was influenced by the changing international oil market and rising supply costs.
NPO Reports that one of the most immediate effects of the latest fuel increase is expected to be on transportation.
Commercial bus operators, taxis, tricycles and other petrol-powered transporters face higher daily operating costs whenever the pump price increases. Many operators are therefore likely to review their fares to offset the additional cost of fuel.
For commuters, the impact could be significant because higher fares would mean workers, students, traders and other daily travellers spending more of their income simply getting to work, school, markets and business locations.
In the same vein, the latest fuel hike is expected to have a wider impact on food items produced in rural communities as they must be transported to urban markets, while traders and distributors rely on vehicles to move products between markets and cities.
An increase in fuel costs therefore raises the cost of moving farm produce, raw materials and finished products.
NPO reports that The International Monetary Fund had previously estimated that transportation accounts for about one-quarter of retail food prices in Nigeria, highlighting the strong link between fuel costs and food inflation.
The pressure could extend to other sectors as businesses that rely on petrol-powered generators and vehicles face higher operating expenses.
Small businesses, particularly those that depend on generators for electricity, may be forced to increase the prices of their products and services to maintain their margins.
Manufacturers, logistics operators, retailers, restaurants, artisans and other businesses could also face higher distribution and operating costs.
The latest increase comes as Nigerian households continue to contend with the rising living costs.
With petrol now approaching or reaching ₦1,400 per litre in some locations, motorists using 40 litres of fuel would spend about ₦56,000 to fill their tanks, compared with ₦52,000 at ₦1,300 per litre.
For a household or business that consumes 100 litres monthly, the difference between ₦1,300 and ₦1,400 amounts to an additional ₦10,000 every month, before considering possible increases in transport fares and the prices of other goods and services.
Dr Aliyu Ilias, an economist and development expert, said the latest increase in petrol prices could worsen inflation and deepen economic hardship for Nigerians.
Illias had also affirmed that the increase in petrol prices would likely translate into higher transportation and production costs, particularly for food and other essential commodities.