Fuel Price Crisis Deepens as Petrol Hits N1,400 and Transport Costs Rise

(Commuters stranded at a bus stop. Photo by News Express)

Transport fares have risen again in parts of the country as petrol prices climbed to as high as N1,400 per litre.

The latest increase followed a surge in global crude oil prices, with Brent crude rising above $100 per barrel amid renewed tensions in the Middle East. Fresh loading data obtained from petroleum marketers showed an upward movement in ex-depot prices across Lagos, Warri and Calabar.

In Lagos, A.A. Rano raised its ex-depot price from N1,275 to N1,279 per litre, while African Terminal, Ascon, Gulf Treasure, Integrated and T.Time increased their rates to N1,275.

Aiteo, Heyden and Nipco maintained their existing price of N1,275, while Emadeb bucked the trend by reducing its rate from N1,278 to N1,274 per litre.

Dangote Refinery, the dominant fuel supplier, resumed gantry loading of Premium Motor Spirit (PMS) in naira on Thursday after a week-long suspension, while raising its ex-depot price to N1,215 per litre.

The refinery had suspended gantry and coastal loading on July 15 after introducing a dollar-denominated pricing template for refined petroleum products.

With the latest adjustment, the ex-depot price rose by N140 per litre, representing a 13.02 per cent increase from the previous N1,075.

It was gathered that Dangote Refinery had cited difficulties accessing sufficient crude oil under the federal government's naira-for-crude arrangement as justification for introducing dollar-based transactions.

Under the temporary dollar-based template, PMS was sold at $0.779 per litre, diesel at $1.087 per litre, and Jet A1 aviation fuel at $0.942 per litre.

Citizens express frustration

Residents lamented that marketers are quick to adjust pump prices upward but slow to reduce them when the reverse occurs.

It would be recalled that prior to the renewed Middle East hostilities, Brent crude had fallen to $70 per barrel, its pre-war level from February.

However, marketers did not lower pump prices below N1,000, even though PMS had sold for N700 per litre before the US-Iran conflict.

The federal government had summoned marketers to ensure pump prices reflected the drop in international crude, but no significant reduction was implemented before hostilities resumed.

In the Federal Capital Territory, residents expressed frustration over the latest hike, saying transportation now consumes a large share of their income.

A civil servant, Grace Okeke, said her salary has remained unchanged even as her commuting costs keep rising, describing the situation as increasingly unsustainable.

Another resident, Musa Ibrahim, warned that higher transport costs would inevitably push up food prices, as farmers, traders and transporters pass the added burden on to consumers.

Commercial drivers said they felt helpless amid the frequent price swings.

A taxi operator, Emmanuel Ujah, said the unpredictability of fuel prices makes it difficult to plan daily operations, while another driver, Ganiyu Jide, said fuel now takes up the largest share of his daily earnings, adding that fares would have to be adjusted just to maintain vehicles and support their families.

Although fares in parts of Abuja have not risen uniformly, commuters reported paying between 20 and 40 per cent more on several routes compared to a few weeks ago.

In Lagos, operators have begun adjusting fares on some busy routes, though competition among commercial buses has limited across-the-board hikes. Marketers are dispensing fuel at varying prices depending on location and supplier, creating uncertainty for operators who often buy fuel multiple times a day.

In Ibadan, however, transport fares have remained relatively stable despite pump prices ranging from N1,260 to N1,300 per litre, with BOVAS selling at N1,260 and Amazing Filling Station at N1,300.

A commercial driver, Kamoru Iyanda, explained that operators cannot always raise fares whenever fuel prices rise since passengers often cannot afford it, forcing them to absorb losses. Another driver, Amoo Saheed, echoed similar concerns about unstable prices eroding earnings.

In Ilorin, several major and independent marketers adjusted prices upward by between N35 and N85 per litre, with AP rising to N1,290 from N1,220; BOVAS and Abanik at N1,260; NIPCO at N1,300; NNPCL stations at N1,305; Optimal at N1,255; External at N1,298; Shafa and Atgris at N1,300; Total at N1,285; and Olak at N1,260.

Residents warned the hike would ripple through transport fares and the prices of goods and services, urging the government to take urgent steps to stabilise fuel prices.

One resident, Ola Yemi, expressed disappointment with government policy, suggesting the timing was linked to the forthcoming election and questioning the shifting explanations given for the price increases.

In Kaduna, petrol now sells for around N1,350, having dropped below N1,200 only weeks earlier.

A driver, Hassan Ya'u Kanti, described the unpredictability as unbearable, noting that prices had jumped from about N1,190 to N1,350 within days, and said passengers often blame drivers despite the rising cost of fuel.

In Adamawa, NNPCL stations now sell petrol at N1,310, while AA Rano, Eterna and other independent marketers charge between N1,360 and N1,370.

The Commercial Manager of Adamawa Sunshine Transport Company, Aminu Muhammad, said the company monitors market conditions for weeks before adjusting fares rather than reacting immediately.

In Kano, transport fares have remained largely unchanged despite the fuel price increase, with tricycle operators saying they are waiting to see if prices stabilise before adjusting fares.

A tricycle operator, Hayatu Usman, said the latest increase was not significant enough to warrant an immediate fare adjustment, while passengers confirmed they were still paying previous rates. A Bayero University Kano student, Mujahid Aminu, said he still pays the same N300 fare he has always paid on his daily route.

In Maiduguri, independent filling stations now sell petrol between N1,370 and N1,390 per litre, while transport fares from Maiduguri to Kano have risen from N20,000 to N25,000.

The Chairman of the Independent Petroleum Marketers Association of Nigeria (IPMAN) in Borno, Mohammed Kuluwu, said the fluctuating prices were discouraging marketers from loading products, as prices sometimes fall before goods even reach their destination.

Small businesses relying on petrol-powered generators also decried rising operating costs. A barber, Chinedu Nwafor, said he now spends significantly more on fuel for transportation and electricity generation, warning that he may soon have to raise the price of his services.

Market forces to blame

An energy law expert at the University of Lagos, Professor Dayo Ayoade, said the situation reflects the realities of Nigeria's deregulated petroleum market, explaining that local petrol prices are now directly tied to international crude prices and exchange rate movements.

He noted that the Petroleum Industry Act limits government intervention in pricing except where market anomalies occur, adding that Nigeria's crude oil commitments under existing financing agreements have significantly reduced the volumes available for domestic supply.

He explained that when crude oil prices rise, the cost is passed on to consumers, pointing out that Dangote Refinery had at one point required marketers to pay in dollars because much of its expenditure, including crude imports, is dollar-denominated, which has limited the usefulness of the naira-for-crude arrangement to the refinery.

He warned that Nigeria's local PMS market would remain exposed to oil shocks linked to the US-Iran conflict for as long as the war continues, with the government largely unable to shield consumers from the resulting cost increases.

He added that under the Petroleum Industry Act, the market now determines pricing, and that the federal government and NMDPRA have limited capacity to intervene, partly because Nigeria has mortgaged the bulk of its crude oil cargoes for cash, leaving very few barrels available for the naira-for-crude scheme.

Another industry analyst, Abdullahi Shehu, urged the federal government to subsidise crude sales to Dangote in naira, arguing that a subsidy of N700 per litre would allow Nigerians to buy petrol at around N500 per litre, which he said would benefit citizens more than losing subsidy savings to mismanagement.

An economist and oil and gas industry expert, Dr Marcel Okeke, said the government's reforms are not working, arguing that any reform that fails to improve the wellbeing and standard of living of citizens cannot be considered successful.

He noted that petrol sold for under N200 per litre as of May 2023, rising to N800 before the Middle East war pushed prices further to between N1,300 and N1,400, and now toward N1,500.

He alleged that the government has failed to fix the country's refineries and end its dependence on imported fuel, attributing this to vested interests benefiting from continued importation and the high profits it generates.

Brent Crude surpasses $101

Meanwhile, global crude oil prices climbed above the $100-per-barrel mark on Thursday, strengthening expectations of a further fuel price increase as marketers contend with rising import and replacement costs.

By 4:40 p.m. WAT, Brent crude had risen 7.43 per cent to $101.10 per barrel, while US benchmark West Texas Intermediate (WTI) gained 6.77 per cent to trade at $92.71 per barrel, with international oil prices up roughly 20 per cent over the past two weeks.

The surge follows renewed security concerns in the Red Sea after Yemen's Iran-backed Houthi rebels claimed responsibility for att@cks on two Saudi oil tankers navigating the Bab el-Mandeb Strait, heightening fears of supply disruptions from one of the world's most strategic energy corridors.

Saudi Arabia has increasingly relied on its Red Sea export terminal at Yanbu to reduce dependence on the Strait of Hormuz, but the latest att@cks have reportedly forced several vessels to delay or reroute, raising shipping costs and deepening concerns over tighter global supply.

Pressure on the market has also intensified elsewhere, with Kazakhstan scaling back oil production after drone strikes disrupted operations at the Caspian Pipeline Consortium terminal on the Black Sea.

Indian state-owned refiners have also suspended Iraqi crude cargoes over security concerns around the Strait of Hormuz, while Russian fuel exports remain limited following months of att@cks on refinery infrastructure.